Division spokeswoman Dawn Dovre said the agency was looking at the new loans being offered in Rapid City and Sioux Falls.
During the November elections, state voters approved a ballot measure that capped the yearly interest rate at 36%. In the past, payday lenders were able to charge nearly 400%. After the approval, most shut down, claiming the state made conditions impossible for them to continue practicing their business.
Dollar Loan Center closed 10 of its stores in South Dakota in January. However, it recently opened two of them and offers one-week loans of $250 to $1,000 at the yearly interest rate of under the 36% cap. The company doesn’t require borrowers to use collateral like an auto title, but they need to provide their address, income and credit rating. Borrowers who fail to repay loans before the seven days are up are subjected to additional fees.
Chuck Brennan, Dollar Loan Center CEO, said the new loan product fits well into the new laws, stipulated in Measure 21, and was voted by the people.
However, industry opponents said Dollar Loan Center just exposed a loophole to prey about desperate state residents. He said their fees on people unable to pay the loans back within the seven days are similar to the rates charged by the 36% cap was implemented.
South Dakotans for Responsible Lending Spokesman and State Senator Reynold Nesiba said Dollar Loan Center’s action looks to circumvent the law that 76% of voters supported. He said the new loan product the company offers is precociously designed for borrowers to default.
