Proposed Legislation Would Cap Payday Loan Rates

2013-01-22T02:00:00Z Proposed Legislation Would Cap Payday Loan RatesBy Melissa Davlin - mdavlin@magicvalley.com Twin Falls Times-News

BOISE • Earlier this year, Roxy Carr of Twin Falls took out a payday loan of $180. When she made a $50 payment recently, she found out she still had $150 left to pay. Much of what she paid went to the loan’s interest.

That’s not right, said Sen. Lee Heider, R-Twin Falls. On Monday, Heider announced he would introduce legislation to regulate payday loan companies.

Heider made the announcement at a joint press conference with the Idaho Community Action Network.

At the press conference, Heider said the proposed legislation would do two things: Cap loan interest rates at 36 percent, and force full transparency on the terms of the loan. The latter would prevent hidden fees and increasing interest rates, he said.

He acknowledged that 36 percent is still a high interest rate, but said it’s better than what companies currently charge. Right now, rates can inflate to as high as 500 percent, he said.

“That’s absolutely, totally ridiculous,” he said.

Carr, who spoke at the press conference, called the interest rate cap “a sensible solution.”

Heider said he was inspired to act after one of his employees struggled after taking out a loan with a high interest rate.

“That’s when my eyes were opened to the cycle people get into when they take out payday loans,” he said.

Heider’s proposal is similar to one introduced last year. That bill, co-sponsored by Rep. Elaine Smith, D-Pocatello, never made it out of committee.

Right now, Idaho caps payday loans at $1,000, but has no regulations on interest rates.

Copyright 2015 Twin Falls Times-News. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(2) Comments

  1. rjoho40022
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    rjoho40022 - January 24, 2013 5:53 pm
    if the government wants to cap interest rates on businesses that lend money to people who have no credit, nothing to secure their loan, no guarantee that they will pay the money back, a loan in 24 hours, etc, at 36%, then the government should set up its own payday lending business. NO investor would ever lend money at that rate in 24 hours with many people who have no credit, no secured collateral, etc. If the government didnt blow billions every year and helped companies grow and retain jobs here (in lieu of having manufacturing move to China) and provided financial education to low income families, then people wouldn't need payday loans, or many wouldn't. Also, some people live beyond their means and put themselves into a bad financial situation. Would you lend to them at 36% with no credit, no collateral, etc..sure..

    www.responsiblepaydaylending.com
  2. DanFD
    Report Abuse
    DanFD - January 23, 2013 2:14 am
    That is not right and I agree. But why hasn’t she checked how big the interest rate was supposed to be. Surprisingly too many people so irresponsibly and carelessly take paydayloans without even finding out details. So whose mistake is that? I am ok with setting some regulations on interest rates, since really some payday lenders are just trying to rip people off. And it has to be done in every single state where this service is legal. Thanx for the post

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