30 Days to Pay bill would extend time to repay payday loans

payday lending_money

Another legislative session, and another attempt to reform payday lending has made it’s way to the Legislature’s to-do list.

Decatur-Republican State Sen. Arthur Orr is leading the fight to put an end to the state’s predatory lending practices in the state Senate. Orr has introduced SB138, the 30 Days to Pay bill, which would give borrowers 30 days to pay payday loans back, versus the current 10 to 14.

Advocates for reform say the average interest rate for the payday loans in the Yellowhammer State is a whopping 300 percent, but with refinancing and missed payments, that rate can get as high as 456 percent, which they say trap borrowers in a debt cycle.

In 2015, the Alabama Department of Banking established a database to enforce an existing law that limits people to borrowing no more than $500 at a time. The database revealed that for the period between Oct. 2015 and Sept. 2016, more than 2 million payday loans totaling $668 million were taken out, by roughly 239,000 Alabamians and borrowers paid $116 million in fees in 2015-2016. Between the same period of time from 2016-2017, another 1.83 million payday loans were taken out by over 214,000 consumers totaling nearly $615 million and borrowers paid $107 in late fees.