Alabama lawmakers are working on legislation to curb the payday lending industry. There currently are more than 1,200 payday lenders operating statewide.
"I retired from it so I can fight the payday and title lenders full time," said former consumer lender Don Gowen, of Decatur. He said payday lenders target low-income residents by charging interest rates of up to 450 percent annually. "They know that the customer is not going to be able to pay," he noted. "They allow the loans to roll over and that's where they make their money."
State Sen. Arthur Orr (R-Decatur) plans to reintroduce a bill in the next legislative session that would give borrowers up to six months to repay a loan, rather than the current two weeks. Other lawmakers have proposed interest rate limits of 36 percent or called for licensing requirements.
The Decatur City Council approved a resolution asking the state to cap interest rates. The city also recently passed an ordinance that requires new payday lenders to be located at least 1,500 feet away from existing ones. More than 20 cities in Alabama have passed similar ordinances.