Payday loan providers and check-cashing outlets work as a substitute for conventional banking institutions by providing short-term loans and may charge interest that is effective of as much as 460 %, county officials stated. Board of Supervisors President George Shirakawa stated they passed the ordinance because such loan providers are “predatory” and target low-income residents.
In line with the Center for Responsible Lending, such financing businesses are disproportionately situated in African-American and Latino communities, county officials stated. Supervisor Mike Wasserman stated which he thinks such payday advances only drive borrowers deeper into debt.
“The high interest levels charged by payday loan providers entangle borrowers in a vicious period,” Wasserman stated.
The board made a decision to make sure that payday financing and check-cashing companies don’t transfer to the unincorporated county areas if San Jose along with other metropolitan areas additionally pass comparable ordinances, in accordance with Andrea Flores Shelton, deputy chief of staff for Shirakawa’s office.