Another Payday Loan Debate on the Horizon

May 18, 2013
Allentown Morning Call (PA)  
payday lending news

Pennsylvania state Sen. Pat Browne (R-Allentown) is preparing to introduce new legislation that he claims will stamp out payday lending by gradually transitioning consumers into mainstream credit. Consumer advocacy organizations, however, are gearing up to fight a plan that they say will continue to sanction high-cost loans and extended periods of debt. Under Browne's proposal, "micro-loans" of up to $1,000 would bear 28 percent simple interest with a 5 percent application fee. The plan does not allow for loan rollovers, so borrowers who cannot repay on time would be offered an extended payment plan. Still, borrowers are eligible for a new loan one business day after repaying the old -- a provision that consumer advocates say has the same effect of a rollover: creating a debt cycle. "The basic precepts are the same," complains Bill Harris, president of the Pennsylvania Council of Chapters of the Military Officers Association of America. His and other groups worry that the loans would hurt older veterans on fixed incomes and younger vets returning from deployment with injuries and/or no job. Browne counters that he has included terms that prevent the cycle of debt, including a limit on the number of consecutive loans a person could borrow. After eight short-term loans, they would be offered longer-term options to help build a credit history. Borrowers who fail to complete eight loans and move into longer-term products would be blocked from borrowing for a period.
Web Link

Abstract News © Copyright 2008-2013 INFORMATION, INC.
Powered by Information, Inc.

Stay Updated

Join the fight against predatory lending. Enter your e-mail to sign up for breaking news, action alerts, and CRL's original research.

   Please leave this field empty

Help Us End Predatory Lending

Predatory lending destroys family wealth, and preys on our most vulnerable communities. You can help us end abusive lending practices by donating to CRL, or by sharing our work with others.