Lawmakers seek limits on payday loan industry

Lawmakers seek limits on payday loan industry

MONTGOMERY, Ala. (AP) — Payday lending customers would have longer to repay their loans under a proposal supporters hope will win approval after years of stalled reform efforts.

HB 258 from Rep. Danny Garrett, R- Trussville, is dubbed the “30 Days to Pay” bill. The proposed bill has already been filed in the Alabama Senate by Sen. Arthur Orr, R-Decatur, as SB 75.

Advocacy groups on Thursday urged lawmakers to support the measure they said will give borrowers a fighting chance to repay the loans.

Proposed legislation would give borrowers 30 days to repay a loan instead of as little as 10 days.

Supporters of the bill said the loans become debt traps with annualized interest rates of up to 456 percent.

Industry representatives have maintained that the loans provide a needed financial help.

Alabama Arise and the Appleseed Center, groups that support reforms, said a state database shows more than 200,000

Alabamians took payday loans in one year. Most of those people took out multiple loans.

“There are payday companies flourishing in states with an APR lower than the current 220% being proposed in the 30 Days to Pay bill this legislative session,” Garrett said. “This begs the question that if their business model works at less than 220% APR in other states, why are they charging 456% in Alabama?”

Orr, the Senate sponsor, said a more stable lending and repayment cycle would help Alabama families and state budgets.

“This bill will help to boost our local economies,” Orr said, “Less money flowing from Alabamians’ pockets to out-of-state payday company headquarters means more money being spent in the community at local shops, which in turn employ Alabama residents and pay local and state taxes.”