The South Bay is putting the squeeze on the number of so-called payday lenders.
According to the San Jose Mercury News, San Jose city leaders agreed on an ordinance, which will cap the number of these type of lenders within city limits. This will make it the largest city in the country to place such a limit. And San Jose will be the first city to restrict where payday lenders can set up shop. They will not be able to open at low-income neighborhoods.
Payday loans offer an easy way for people to access money. People can borrow a maximum of $300, but they must repay it within two weeks plus a $45 fee. Some council members say people often use these types of businesses in a seemingly endless cycle, and end up paying more money than they can afford based on their low wages. And the fees added to the loans are equivalent to an interest rate of more than 400 percent
But not everyone agrees. Councilman Pete Constant says there is a need for payday lenders. For some people, he said, this is the only place they can have access to quick cash and the business practice is also regulated.
There are currently 38 payday lenders in San Jose. Under the new law, lenders can replace a lender at the same location within six months. But after the deadline date, lenders must be a quarter mile from other lenders and low-income areas.