Lawmakers seek to end triple-digit interest on payday loans and car titles
By Charlene Crowell / NNPA Newswire
A group of Washington lawmakers are joining forces and influence to legislate a crackdown on predatory lending nationwide.
Seventeen U.S. House lawmakers and eight U.S. senators are backing companion bills that would cut the cost of payday loans and car titles from their typical 300% annual interest rate to no more than 36 % – the same rate protection that Congress first provided to military families in 2006.
Today, 90 million Americans living in 15 states and DC enjoy rate caps of 36% or less.
But in the other 35 states, residents remain vulnerable to triple-digit interest rates that average 400% nationwide on an average loan of just $350.
When consumers use their car titles as collateral for a larger and equally expensive loan, personal transportation loss occurs when borrowers can no longer afford the skyrocketing costs.
If enacted, the legislation is expected to have an immediate impact on payday and car title loans, but would ensure that all consumer financial services would end cycles of debt that trick and trap unsuspecting consumers into debt. long-term.
The bicameral effort is led in the US Senate by Senators Dick Durbin of Illinois and Jeff Merkley of Oregon.
Their leading counterparts in the House of Representatives are Matt Cartwright of Scranton, Pennsylvania and Steve Cohen of Memphis, Tennessee.
“Predatory lending disproportionately hurts people who are already in financial difficulty,” Rep. Cartwright noted, where in Pennsylvania these kinds of predatory, high-cost lending are already prohibited by state law. “This consumer-friendly legislation would relieve the exorbitant costs for many low-income consumers across the country.
Cartwright’s House colleague Rep. Cohen felt the same way. “Throughout my career, I have always worked to protect people from those who would take advantage of them through predatory lending practices that can wreak havoc in people’s lives and perpetuate a cycle of debt,” he said. -he declares. “Justice and morality dictate that reasonable caps on interest be adopted to protect borrowers from sneaky lenders.”
From the Deep South to the Pacific Rim, and west to the mid-Atlantic and Midwestern states, state payday interest rates range from 662% in Texas to 460% in California and 601 % in Virginia.
Similarly, in the Midwest, the states of Illinois, Missouri, Ohio, and Wisconsin have comparable high interest rates that all exceed 400%.
In Alabama and Mississippi, two of the poorest states in the nation by per capita income, payday interest rates are 521% and 456%, respectively.
“What we’ve seen across the country is that when voters are given the option to support a rate cap, large majorities consistently say ‘No’ to debt-trap loans,” said Yana Miles, adviser main legislation at the Center for Responsible Lending. “When it comes to state legislatures, reform efforts are often thwarted by industry.”
Already more than 40 national, state and local organizations have jointly written to their members of Congress in support of the legislation.
Signatories to the correspondence include civil rights organizations, trade unions, consumer rights advocates and research institutes.