MURFREESBORO, Tenn. (WMOT/TNS) -- Eighteen states and the District of Columbia prohibit high cost payday lending, but the short-term lenders are thriving in Tennessee.
Currently, lenders can charge as much as 375-percent interest.
A bill that would have capped the interest rate charged by payday lenders at 28-percent was considered during the just ended legislative session, but never made it out of committee. Andy Spears with Tennessee Citizen Action says payday loans are targeting people who’ve run out of options.
"People go to these places when there's no where else to turn for money. It really is kind of a last effort to get out of a tough situation, so I don't think people should be trapped in a cycle of debt. "
Spears says if you are in need of quick cash, it's important to exhaust all of your options before approaching a payday lender.
"They should try every other option first. Ask your friend, ask a boss, ask your family member, and I would be a lot more comfortable with payday lenders if you could cap their interest rates."
The Consumer Federation of America also warns of car title and tax refund anticipation loans. In Tennessee in one year alone, more than 18-thousand cars were repossessed by car title loan companies.