New laws in Wash­ing­ton state have been put in place to limit the amount of money peo­ple can bor­row from pay­day loan companies.

The pay­day loans are very short term, very high inter­est loans that can be bor­rowed against your next pay check. The bor­rower often writes a post dated check to the lender that they cash on the date of the bor­row­ers next paycheck.

Some peo­ple get caught in a trap of going to these lenders repeat­edly, or bor­row such a large amount that their next pay­check can­not cover the high inter­est. So the news laws hope to ease these problems.

From The Olympian, Asso­ci­ated Press writer Manuel Valdes inter­views a pay­day loan busi­ness owner.

The new law lim­its the size of a pay­day loan to 30 per­cent of a person’s monthly income, or $700, whichever is less. It also bars peo­ple from hav­ing mul­ti­ple loans from dif­fer­ent lenders, lim­its the num­ber of loans a per­son can take out to eight per 12 months, and sets up a data­base to track the num­ber of loans taken out by people.

“I think it’s going to affect (them) pretty dra­mat­i­cally,” said (Ken) Weaver, whose Apple Val­ley Check Cash­ing stores are in Moses Lake and Wenatchee. “We don’t know if we’re gonna be open in six months.”

The limit on how many loans peo­ple will be able to take out is what will cut into his stores’ rev­enue, Weaver said, echo­ing one of the argu­ments from the pay­day indus­try on how the new law will cut into its busi­ness model.

But for con­sumer advo­cates who lob­bied for the new law, the reg­u­la­tions being put in place are a step toward pro­tect­ing peo­ple from falling into debt. For years, they have argued that pay­day lend­ing leaves peo­ple pay­ing off loans for a long time, often using other pay­day loans, and pay­ing heavy interest.

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