Payday loan lenders based in Montana may soon become extinct.

On Jan. 1, 2011, a new state law took effect after passage of Initiative-164 last November. The ballot measure mandates limits on what certain lenders can charge, capping the rate at 36% for short-term loans.

Several payday loan lenders in Montana have reported that I-164 spells doom for their business. Some payday lenders are simply collecting outstanding loans, but are not marketing for new customers. Reports also indicate that cash-strapped consumers are turning to other methods for finding quick cash, such as pawn shops or possibly online payday loan businesses.
Some proponents of I-164 believed the law would lead to an increase in business for payday lenders, because more consumers would be attracted to the lower interest rates. Those with that opinion did not take into account the cost of doing business for the payday lenders.

Needless to say, there will be many employees who worked for Montana payday loan firms who will be scrambling to find work in the near future.