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.