Salt Lake toying with limits on payday lenders

You've seen the commercials: If you're short on cash, stop by — with a post-dated check — and we'll loan you what you need, with interest as high as 500 percent annually.

Now, a Salt Lake City Council member wants to slow the growth of these businesses, known as payday lenders.

Nancy Saxton is proposing that the council make businesses offering payday loans a conditional zoning use, which would give the council final say before any such business could operate within the city. She would also cap the number of lenders in the city based on population or restrict their proximity to each other.

"Here we have people that are probably the least able" to pay back high-interest loans, Saxton said. "When you get desperate, sometimes reason goes out the window. I think the term 'predatory lending' is probably an understatement."

Payday lenders are becoming more and more prevalent in Utah. In states that allow payday lending, the businesses average about one per 10,000 residents. In Utah, that number is 1.6 per 10,000 and growing, the Deseret Morning News reported in 2005.

Salt Lake City has at least 24 businesses that make payday loans. Saxton said she has eight such businesses located within a block-and-a-half of her downtown home.

"I'm not asking for them to be abolished," she said. "I'm asking that we limit the number, we figure the number that are necessary to serve the public."

But Councilman Carlton Christensen, who is a business analyst for Zions Bank, questioned whether such an ordinance would be effective. He said that while Zions does not offer payday lending, he knows of at least one major bank in town that allows payday loans through cash advances at automated teller machines.

"If we think we're going to limit how people access money, we're just fooling ourselves," Christensen said.

And Councilman Dave Buhler said he is more comfortable with limiting the proximity of payday lenders to each other — as a way of preventing them from overwhelming certain neighborhoods — than with placing a population-based restriction on their numbers.

"I don't know what our basis is except we don't like them," Buhler said.

The Deseret Morning News contacted several payday lenders Tuesday, but all either declined to comment or did not return phone calls and e-mails.