LoanMax Says They’re Going to Close

With the new legislation in Iowa that Governor Chet Culver signed that will limit the amount of annual interest rates that can be charged on car title loans, some companies are saying that they will not be able to stay open. LoanMax has issued a statement that says that they are going to be forced out of business by the new legislation, now that they are no longer allowed to charge 300+% on car title loans.

Culver signed House File 5 into law as he saw that these businesses were preying on the poor and uneducated, and wanted it stopped. The biggest difference is going to be felt by the smaller companies that will not be able to compete with the larger banking type companies. LoanMax’s owner, Rod Aycox, says that instead of being able to charge $251 from someone who borrowed $400, now he will only be able to charge them $33.

He says that is not enough to keep his business running. He says he has employees he has to pay, health insurance for them and himself, and regular bills like electric to pay, and this new law will harm him and other such companies to the point where they will not be able to stay open.

Democratic leaders say that it is a victory for the citizens of Iowa; they will no longer be taken advantage of by this type of business. As for the fact that the loan companies say that they cannot survive unless they charge a minimum of 211%; lawmakers say that there is a problem with their business model, otherwise they would be able to be successful without ripping people off.

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