New pay day and title loan companies wishing to start business in West Point are facing a moratorium until the city can make further decisions on whether or not these lenders should be permanently banned from the city.
A motion for the moratorium, which puts a temporary halt on pay day and title loan companies entering West Point and denies them a privilege license, was carried Thursday night at the Board of Mayor and Selectman and goes into effect immediately. City Attorney Orlando Richmond, said the moratorium will only be in effect for one year, giving the board time to decide what is best for the city regarding the lenders.
â€śThe moratorium doesnâ€™t ban these businesses,â€ť Richmond said. â€śI just think it holds the status quo until there can be some serious discussion about the value it will add to the community and how this will look in the future.â€ť
There are currently six pay day loan/title companies located in West Point that are legally allowed to charge $22 in interest for every $100 borrowed, up to 572 percent interest annually.
Scott Colum, Staff Attorney for the Mississippi Center for Justice, brought this issue to the board earlier this year and said a ban on pay day companies will assist in the cityâ€™s efforts of financial growth.
â€śIt helps because it takes a business that drains money out of the community away from the community,â€ť Colum said. â€śInstead of taking money away from the community, it will help small businesses that are working to grow the economy.â€ť
Colum said pay day lenders usually cluster together along major highways and try to compete on convenience instead of competing on price, all charging nearly the same interest rates. He said the lenders target those who cannot afford the loans, causing those individuals to sink deeper into debt.
â€śThe system is set up where youâ€™ll have to take out multiple loans and it leads to financial destruction,â€ť Colum said.
Vice President of Public Affairs for Advance America Jamie Fulmer said pay day and title loan companies exist because people demand their product, thus it is a necessity for communities.
â€śThe consumers who use our products are very clear in the fact that they like this product, they use it responsibly and they want to have continuing access to it,â€ť Fulmer said. â€śThis is a cost-competitive product that consumers want when they find themselves in a bind.â€ť
Fulmer said these companies are also aware of the importance of economic growth in the city and do their part to help in that area.
â€śOne should not lose sight of the fact that we employ local citizens, so we do have a contributing factor to the community,â€ť Fulmer said.
The original draft for the moratorium developed by the Mississippi Center for Justice states that existing pay day and title loan companies cannot renew or transfer their privilege license to another entity, which has raised concerns with some lenders who feel their heirs should have that privilege in the case of the ownerâ€™s death. Richmond will make revisions to that part of the draft and present it to the board Sept.7 when decisions will be made concerning the issue. Richmond said apart from that, the resolution to delay business for pay day and title loan companies is legally sound.