The Idaho Senate has passed SB 1314 to curb payday lending in the state and cap the maximum amounts and interest rates of these loans. The proposal is now awaiting approval in the House of Representatives.
“This would help those in payday lending to get out of a cycle of payment, fee, payment, fee,” said the bill’s sponsor, Sen. Lee Heider (R-Twin Falls). “Fees get out of hand and make it a problem for people to pay back their loans.”
Although it does cap payday loans at $1,000, Idaho otherwise has done little to regulate the industry. If passed, the legislation would allow payday borrowers to take out loans worth no more than 25 percent of their gross monthly income. Lenders would also be required to offer extended payment plans, without additional fees or higher interest rates, to borrowers who need more time to resolve the debt. Additionally, the number of charges for bounced checks written by borrowers would be capped at two bounced checks per loan. Nearly 39,000 checks to payday lenders in 2012 were returned because of insufficient funds, the Idaho Department of Finance reports.
Finance Director Gavin Gee said the law would protect low-income borrowers from falling further into debt. While it does not limit the number of payday loans a borrower can take out at once, it could be a starting point for further regulation.