Trapped for cash: Deeper in debt

Some cashiers, such as one at the Cash Store in Layton, said the 521 percent interest offered there is "the same as everyone else charges," although rates vary greatly and were sometimes cheaper in nearby stores. Cashiers at several stores said their rates "are what the state allows," which is true, but seem to suggest that Utah has one rate or a maximum set by law. It does not.

One cashier at Cash City in Midvale quoted by phone two different rates: a lower one of 391 percent interest if no rollovers are allowed and a higher rate of 521 percent allowing rollovers "with six weeks interest free at the end of a 12-week period."

What she failed to mention is Utah law bans rollovers beyond 12 weeks, so lenders cannot legally charge more interest on that loan beyond that time anyway, so "six weeks interest free" at the end of that period isn't much of an offer.

Some cashiers also tried to make high interest rates seem not so bad. One at Check Into Cash in Orem said the 521 percent annual interest it charges "seems high because it is only a two-week loan," noting it "only costs $20 per $100."

High interest is high interest and doesn't merely appear that way because of a short loan period. If the 521 percent annual rate were paid for an entire year, a $100 loan would cost $521. For just two weeks, it costs $20. But the rate is the same.

Inspections vary

State regulators report finding about half as many violations as the Deseret Morning News.

During required annual inspections in 2004, Jaramillo said the state found that 12 percent of lenders failed to post required signs about interest and dollar costs of loans and 7 percent failed to post phone numbers of regulators.

Hilton's Coalition of Religious Communities reported far more violations than what regulators or even the Deseret Morning News found. When it sent people undercover to ask about loans at 57 stores last year, it said it found three out of four violated at least one state law.

That included 23 percent that failed to post required interest rate disclosure signs. Most of the violations reported by Hilton's group were for something not tested by the Deseret Morning News: Whether they would, as required by law, allow a borrower to back out of a loan without penalty within 24 hours.

Hilton's group says 53 percent of lenders said they would not allow that to occur. State law provides such a right of rescission, but it does not require lenders to disclose that the right exists in loan contracts.