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Industry Financed Study Questions Payday Interest Rate Cap

HANOVER, N.H. -- A study partially financed by the payday lending industry has suggested that a cap on payday loan interest rates has actually hurt the consumers that consumer advocates have sought to help.

By David Morrison | Updated on November 17, 2008

HANOVER, N.H. — A study partially financed by the payday lending industry has suggested that a cap on payday loan interest rates has actually hurt the consumers that consumer advocates have sought to help.

Jonathan Zinman is an assistant professor of Economics at Dartmouth College. In his study Zinman studied the effects of an interest rate cap on payday loans put into place in Oregon in July of 2007. The cap essentially limited payday lenders in Oregon to charging $10 per $100 lent and set a minimum loan term of 31 days and the majority of payday lenders in the state left.

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