New legislation has been proposed to tighten control of Alabama's payday lending industry -- which, according to Sen. Arthur Orr (R-Decatur), costs local economies $1.94 in household spending for every $1 that it takes from consumers. Orr is sponsoring Senate Bill 410, which would give payday borrowers as long as six months to pay back the debt. Currently, loan terms are set on a bi-weekly schedule.
Orr's plan comes on the heels of a failed measure from Rep. Patricia Todd (D-Birmingham) that stalled in committee earlier in February. Her bill would have stipulated state licensing of payday lenders, a 36 percent interest rate cap, installment repayment plans, and a loan limit of no more than six every 12 months. Lenders also would have been blocked from contacting consumers at their homes in an effort to collect the debt.