Loan business back in business after finding loophole in law - WALB.com, Albany News, Weather, Sports

Loan business back in business after finding loophole in law

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Albany- When the district attorney's office raided First American Cash Advance on North Slappey last year, Ken Hodges didn't expect to see them opening again only months later.

But First American employees are getting the store ready. Starting Friday, this closed sign will say open.

"The people who have loans with them are going to need to make arrangements to pay those loans," Hodges said.

First American found a loophole in Georgia law. The loans they provide are financed through South Dakota banks. That means they cannot be held to state usery laws.

"We ought not to allow South Dakota banks to come in here and charge rates that Albany, Georgia banks and Atlanta banks can't charge here in Georgia," he said.

Right now, they can. So it's legal for the business to charge interest rates of 400, 600 and even close to 1000 percent interest on their loans.

The company did settle for $15,000 that will be divided among the more than 200 victims who have loans here. Letters will be sent to people who have loans at First American concerning when the checks from that settlement money will be ready. Those people are not being charged interest on the loans for the time the business was shut down.

Hodges hopes that money will provide some help.

"To hopefully allow them to get these loans paid off and move away from the First Americans and go back to more traditional financing."

Hodges also wants the state legislature to look at changing the law next year to keep businesses like this from charging outlandish interest rates. He's also sending out a warning to citizens about the importance of fully understand the contract with First American.

"They are paying exorbitant interest rates. Rates that they are going to be in a spiraling circle of debt that they're not going to be able to get out of."

Hodges hopes people will find another way to get "cash when you need it most" than turning to First American.

posted by brannon.stewart@walb.com