[JoAnn] Hesson\u2019s $5,125 loan was scheduled to be repaid over more than seven years, with $495 due monthly, for a total of $42,099.85 \u2014 that\u2019s nearly $37,000 in interest.<\/p>\n
\u201cAccess to credit of this kind is like giving starving people poisoned food,\u201d said consumer advocate Margot Saunders, an attorney with the National Consumer Law Center. \u201cIt doesn\u2019t really help, and it has devastating consequences.\u201d<\/p>\n
These pricey loans are perfectly legal in California and a handful of other states with lax lending rules. While California has strict rules governing payday loans, and a complicated system of interest-rate caps for installment loans of less than $2,500, there\u2019s no limit to the amount of interest on bigger loans.<\/p>\n
State lawmakers in 1985 removed an interest-rate cap on loans between $2,500 and $5,000. Now, more than half of all loans in that range carry triple-digit interest rates.<\/p>\n