Despite the passage of a payday-lending ordinance that restricts where the establishments may set up shop in Iowa City, some say there are other options out there for people who need to borrow money.

The Iowa City City Council adopted a payday-lending ordinance on Tuesday night that requires payday-lending institutions to be at least 1,000 feet away from schools, churches, and daycares, among other places. The ordinance passed on a 6-0 vote. Councilor Michelle Payne was absent.

“I have some hesitations, but I think that it’s the right thing to do,” City Councilor Connie Champion said.

Champion was concerned about completely blocking payday lenders from Iowa City. She said payday lenders aren’t always bad for cities and can be helpful to some people.

Payday lenders allow people to take out short-term loans between paychecks and pay the business back with interest after they receive their next paycheck.

There are six payday-lending establishments in Iowa City. Employees at these establishments declined to comment on Tuesday evening.

The establishments are considered to be predatory by many because they charge high interest rates that are difficult to pay back in the time they are due, increasing the likelihood that a person’s debt will spiral out of control until it’s unmanageable.

 “They suck the money out of our neighborhoods and communities,” said David Goodner, the Iowa City representative for the Iowa Citizens for Community Improvement.

Three members of the that group spoke to the City Council in support of the ordinance. The group has battled predatory lending for 30 years.

Goodner said many businesses don’t want to set up shop beside payday lenders because they tend to be “eyesores” in the community. He believes the ordinance is going to help stabilize Iowa City neighborhoods.

Four other cities in the state have passed ordinances restricting payday-lending services: Des Moines, West Des Moines, Ames, and Clive.

Iowa City officials say there are other options for people to use aside from payday lenders.

Some credit unions and banks, including Iowa-based Veridian Credit Union, now offer services similar to payday lenders but with lower interest rates and the ability to help save money on the side.

They are called Payday Alternative Loans, and their interest rate is as low as 19 percent as opposed to the 190 to 780 percent interest charged by payday lenders.

“[The Payday Alternative Loans are] something we were proud to establish,” said Mark Koppedryer, the vice president of branches for Veridian. “It helps borrowers to establish a healthy savings habit.”

The push by Veridian to help curb predatory lending has been helpful in stopping increasing debt for people.

“Too often, the result is mounting debt, and it becomes very difficult for the borrower to pay back in a reasonable amount of time,” Koppedryer said.

Banks and credit unions will not be affected under the ordinance and will not be regulated as delayed deposit services.

The ordinance was unanimously passed on all of its previous considerations.