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Payday loans in Utah now average 466 percent annual interest — down a bit from an average 474 percent in the previous year, according to a new report.

In comparison, academic studies say the New York Mafia charged 250 percent interest for its loans in the 1960s.

At the new rate, the average Utah payday loan costs $17.93 in interest every two weeks per $100 borrowed, down by 29 cents from the previous year, according to the annual fiscal 2014 report by the Utah Department of Financial Institutions.

"It's going in the right direction, but it's far from where it needs to be," said Linda Hilton, who just retired as director of the Coalition of Religious Communities, which advocates for the poor.

"Until the interest rate is 36 percent or lower, anybody who takes out a payday loan is headed for a debt trap," she said. "Eighteen states have outlawed high-interest payday loans for a good reason. They are a bad, dangerous product."

David Parkinson, spokesman for the Utah Consumer Lending Association of payday lenders, defends the loans saying "talk of annualized interest rates is highly misleading given the interest on payday loans is limited to 10 weeks." He says the loans often are more economical than fees for bounced checks or utility reconnection.

Most such loans are for two weeks, or until the borrower's next payday. Utah law allows renewing them for up to 10 weeks, but critics say the poor often are pressured to take out new loans to avoid legal action over a default on the original — and find themselves in spiraling debt.

Highest rate • The report said the highest interest charged on any payday loan in Utah was an astronomical 1,564 percent annual interest — about $60 every two weeks per $100 loaned. Utah has no cap on the interest that can be charged.

"It should be against the law, and my heart just goes out to whoever took out the loan and didn't realize what kind of interest rate they were getting into. It just shows how predatory this type of loan can be," Hilton said.

Parkinson says those numbers are not as bad as they may first seem. The 1,564 interest "is due to the fact that some lenders charge a flat fee regardless of the loan duration, which results in a higher annual percentage rate" if the loan is repaid before it is actually due, he said.

"For this reason, the Utah Consumer Lending Association continually encourages consumers to shop around for the best rate possible."

He also noted the report said some people received payday loans at no cost, through promotions or cancellations. About 2,944 Utahns took advantage of a law allowing them to rescind loans at no cost within a day of borrowing.

Reform after scandal • After payday lenders played a key role in the scandal that toppled former Utah Attorney General John Swallow, lawmakers earlier this year enacted numerous reforms for the industry.

And Rep.-elect Brad Daw, R-Orem, says he plans to push more next year. After Daw unsuccessfully attempted reform in 2012, Swallow funneled money from payday lenders in hard-to-trace ways to help defeat Daw then, according to Utah House investigators, before he made a comeback this year.

That was in return for hundreds of thousands of dollars in "dark money" donations from payday lenders that Swallow used that year to defeat his primary election opponent, Republican Sean Reyes, who eventually replaced Swallow after he resigned.

Rep. Jim Dunnigan, R-Taylorsville, the new House majority leader who led the investigation into Swallow, pushed a bill this year to give borrowers 60 days after reaching the 10-week limit on a loan to pay off the debt without lenders taking any further action against them, such as filing a default lawsuit.

It also requires lenders to file any default lawsuits in the same area where borrowers obtained the loan. Dunnigan said lenders had done such things as sue people living in St. George in an Orem court, making cases difficult to defend.

Daw said he is considering a bill requiring lenders to create a database of all payday loans in the state at any time, and then limit the number of loans anyone could have at one time — essentially stopping people from taking out loans from one company to pay another.

"That is done in some other states, and I think it may be the best way to ensure people don't take out loans they cannot afford," Daw said.

Interest break • Utah law already allows payday loan borrowers to call a halt in interest on one loan per year, and pay it off in four equal installments over at least 60 days. The new report says 6.5 percent of payday borrowers used that provision last year.

Hilton called that disappointing. "If people really were offered payment plans and knew that was an option up front, many more people would accept those. Right now you have to know to ask. From the clients I've talked to, it's offered as a last resort, not as the first solution."

But Parkinson said, "All lenders are required to disclose the payment plan option in large bold font within the loan paperwork. A potential reason why just 6.5 percent of consumers use the extended payment plan is because the vast majority of them can afford to repay their loan within the arranged time frame."

The report said the average time for loans before they are repaid in full is 31 days, down from 33 the previous year.

Parkinson said that "indicates payday loan customers are becoming more successful borrowers and better managing their short-term needs."

Hilton disagrees. "It's a very misleading number. People take out a loan for a month, then they borrow from another company to pay back the first. So you really don't know that loan has been paid off and retired as opposed to borrowing from Peter to pay Paul."

The report also says payday lenders have 599 physical stores in Utah. That is more than the combined number of stores in Utah of McDonald's, Burger King, Wendy's, Subway, Carl's Jr. and Arctic Circle. —

Utah payday loans, 2014

• Average annual percentage rate charged: 466%, or $17.93 per $100 loaned for 2 weeks.

• Highest APR actually charged: 1,564%, or $60 per $100 loaned for 2 weeks.

• Average number of days before a payday loan is repaid: 31.

• Number of payday loan stores in Utah: 599 (more than combined number of stores here for McDonald's, Burger King, Wendy's, Subway, Carl's Jr. and Arctic Circle).

Source: Utah Department of Financial Institutions annual report for fiscal 2014.