(WXYZ) – As inflation puts pressure on families, others could turn to payday loans for help. But some say the law allows predatory payday lending in Michigan and it needs to change.

The nonpartisan Michiganders for Fair Lending said it submitted more than 400,000 signatures to put payday loan regulations on the ballot in November.

It was a pothole that caused a big financial bump down the road in Amber Wyatt’s life. His car needed repairs.

“I thought it was something simple, so I took it to the mechanic. I found out it was something big. $715 big,” Wyatt said. “I couldn’t afford to pay. So I had to borrow money to get my car and go to work.”

She took out a salary advance in November.

“I got the money like this. The problem is you borrow $600, you have to pay back $677,” Wyatt said.

She then found herself having to replenish and renew that payday loan, each time getting significant new fees. And life went on. She went on maternity leave to have her beautiful baby 4 months ago.

“We’re all trying to survive and keep lights and shelter and food on our kids’ tables,” she said.

responsible credit center

Chart: Responsible Credit Center

There are currently laws in Michigan limiting the fees charged on payday loans, but many don’t realize how high the interest rates they pay are.

According to the Michigan Department of Financial and Insurance Services, if you borrow $100 for 2 weeks, the maximum charge allowed is $15. That might not seem like a lot, $15, if you’re in trouble. But if you break it down into interest, $15/14 equals $1.071429 per day. For a loan of $100, you convert it to an annual percentage rate by multiplying it by the number of days in the year. That’s 391% interest per year MAX for a $100 Michigan loan.

Source: Michigan Attorney General’s Department

Now there is a movement to lower this rate with a new law.

“There are more payday loan stores than McDonald’s,” Josh Hovey said.

Hovey is the spokesperson for the Michiganders for Fair Lending campaign.

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He points to a Center for Responsible Lending report that found here in Michigan, people spend more than $100 million a year on payday loan fees every year.

The Center says Michigan has what it calls a payday loan debt trap with average payday loans announced in 2021 around 370% per year.

“It’s fair to charge someone interest for a loan, but we don’t think 370% should be the number,” Hovey said.

Michiganders for Fair Lending has turned over more than 400,000 signatures that the state is currently reviewing. If approved, his petition would allow voters to decide whether to cap interest charged by payday lenders at 36% per year.

“It’s not an unreasonable thing to ask not to attack people,” he said.

When asked if it would put people out of business, Hovey replied, “No, I think any business should be able to make money on 36% interest.”

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7 Action News has contacted Check N Go and Advance America for their response to such a proposal, but has not yet received a response. However Advance America website says his fees are sometimes lower than the costs people face if they can’t accept a payday loan. He also says a 36% interest rate cap would not cover the cost of running their business and would be an effective ban on cash advances.

Wyatt has mixed feelings. The payday loan got her out of trouble, though she admits it got her into trouble again.

“When you have an emergency and you need money now, you don’t have much choice,” she said.