Legislators in Idaho concur that residents deserve better protections against predatory loans but disagree on the best approach to accomplish this goal. Under legislation crafted by Sens. Lee Heider (R-Twin Falls) and John Tippits (R-Montpelier), lenders would have to offer borrowers a payment plan if they cannot repay the debt all at once; and they would be prohibited from adding interest and fees to the remaining balance. Additionally, payday customers would be eligible to borrow no more than 25 percent of their monthly income.
While finding the proposal to be a step in the right direction, Heider and Tippits' colleague, Sen. Roy Lacey (D-Pocatello), believes the bill does not go far enough because it is written exclusively to address payday lending abuses. Lacey is concerned that the focus on payday loans will leave Idaho residents vulnerable to other types of high-interest, short-term advances, like auto title loans. At the same time, he says the legislation could inadvertently affect types of credit that it was not intended to -- such as bank lines of credit. "We need to keep it from affecting industries that we don't want to be affected," Lacey stresses. "We need to look into it, predatory loans are bad, but we need to look at carefully."