Selma Council puts freeze on more payday loan businesses
Payday and title loan businesses may have to wait to open up shop in Selma after the Selma City Council approved a six-month moratorium.
The moratorium will not affect businesses with a current license, but would prevent new payday and title loan stores from obtaining licenses during the six-month period, according to city attorney Jimmy Nunn. Nunn said the moratorium applies to payday loans, title loans, car title loans and other similar businesses.
Ward 8 Councilman Michael Johnson proposed the moratorium after having a friend compile a significant amount of interest from a payday loan store.
During the moratorium, Planning and Development Director James Benderson said the city would compile basic statistics about payday and title loan stores in the city limits. Benderson said statistics would include: how many are in the city limits, where they are located and any potential laws passed in the Alabama Legislature pertaining to the payday loan stores.
“We are going to make sure we look at the situation thoroughly and get as much information as we can before presenting it to the city council,” Benderson said. “At that point, it will be up to them as to how to proceed.”
Critics of the payday loan industry say the stores take advantage of the impoverished. Supporters and members of the industry say payday loans offer a valuable service to people who need a small cash advance and have poor credit.
Many payday loan stores in Selma offer a maximum of $500 with a more than 400 percent interest rate. In a previous interview with the Times-Journal, Advance America vice president Jamie Fulmer said the more than 400 percent interest rates are one-time fees rather than an annualized rate because the loans are either spread over two weeks or one month.