I have been quietly watching a piece of legislation to see if it would actually make it all the way through, and to my dismay it looks like it won’t.
The legislation is designed to reform the payday loan industry. Senator Orr and others pushed this bill through the Senate but it is struggling to get out of committee in the House. With the session winding down this important piece of legislation could be out of time.
The payday loan industry has a place in our society. Higher interest rates are a must as the collection percentages are lower and that causes greater costs for the business owner.
The truth though is that the industry model is built on repeat customers who have to take out loans to pay off other loans and the cycle continues. Typically these loans are for 14 to 30 days, which is a very short window. They have very high interest rates. These rates are often over 100% and can reach over 400%.
Payday loans should be a one-time occurrence to get you back on your feet. Under today’s rules they are a trap that many cannot get out of, and the original debt can get more than quadrupled by interest.
Senator Orr is pushing for longer payoff times and lower interest rates. Today the House version of this bill is in the House Financial Services Committee. This committee is known for slow action and has a very small window to review and push the bill to the floor for a vote.
This is good legislation that will regulate an industry that needs regulation. Move the bill forward and get it to the floor before the session ends.
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