A Louisiana Senate committee has dramatically altered Senate Bill 84, a proposal by Sen. Ben Nevers (D-Bogalusa) to make payday loans more affordable and limit the amount of interest that can be charged on an annual basis. Instead of a rate cap, however, the measure now contains a prohibition against consumers taking out more than 10 payday loans in a year. The legislative panel also added language that allows for a database to better track how much consumers borrow.
Nevers agreed to the changes and promised to work on the bill before it reaches the Senate floor. The legislation advanced without objection, though neither supporters nor opponents appeared pleased with the changes. Dianne Hanley, a leader for grass-roots organization Together Louisiana, says her group will focus on House Bill 239, which includes a 36 percent APR limit.
Legislation to change the way payday loan businesses operate is stirring up controversy in Louisiana. Critics say the loans are too expensive, which makes them predatory and traps consumers into taking out new loans to pay off previous ones. AARP, Together Louisiana, and other organizations support the 36 percent interest cap. The Senate committee reported examples of the APR reaching 200 percent to even 477 percent. Nevers said tens of thousands of people are struggling with payday loans.