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Pay day loans.
They are good for their stated purpose. Someone who has to pay their electricity bill on the 10th to keep their lights on but doesn't get paid until the 16th. The person borrows say $150 pays their bill and then pays back say $165 on the 16th. Yes it's a high interest rate but it's $15 paid to be able to keep the lights on, or the car from being repossessed or insured or whatever the need is for.
Of course the payday lender wants the person to roll the loan over and pay more interest, takes discipline to not do that, you get your paycheck you want the money. The lenders don't like the customer who pays the loan off the next week, they are happy to take the $15 or $20 they made off of them but they'd rather make that $15 or $20 the next week as well.
My regulatory idea is pretty "centrist," big surprise. For people who do roll their loans over, a straight cap on what can be paid on the original loan. I'd say 150%. Once interest payments have been made totaling 150% the original principle is considered paid in full. This would not cap their rates anymore than the barely there cap is now. They would still be able to keep lending to people and if they chose to keep an outstanding loan open for years they could but after 150% interest is paid they would be getting a new principle amount in their hands.
Of course I could be way off, it's just off the top of my head, let me know.
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