…Bill to “Cap” Payday Loans
There have been major setbacks in legislature with a plan to cap rates for payday lenders. Lawmakers think regulation can be done keeping in mind the favors of the industry. The bill proposes to cap rates at 36% and has been assigned to a committee of the lawmakers. It is said that if Payday loans are rolled over many times it may cost the borrower up to 500% annual interest.
The only state which does not have regulations for dealing with payday lenders is Wisconsin. After a hearing on Payday lending, the chairman of the financial committee, Rep. Jason Fields said that a cap on rate is not needed and due to lack of support from Sheridan and the Senate the committee is unlikely to pass a cap. According to him doing something which the Senate will not pass is not justified. Other regulations however will be approved. According to Fields, Poverty was there in Milwaukee even before payday loans.
Although, Gordon Hintz acknowledged his bill might not pass, yet he was of the view that rate cap is best way to regulate the industry. Sheridan’s statement that rate cap went too far was the first setback that Hintz faced last month. Industry said that a 36% cap will throw them out of business.
With four alternative proposals, cap title loans will require lenders to report more information and limit late payment charges and bar on rolling over two week loans thus practically banning it. On Wednesday’s hearing saw much audience with stickers saying ‘I choose payday advance’ lobbying, which was also testified by supporters of rate cap.
