Senate Passes ’30 days to pay’ bill to reform payday lending
On Thursday, the Alabama Senate passed a bill that seeks to issue reforms to Alabama’s payday loan industry. The bill passed with bipartisan support on a vote of 20-4, and now moves to the House. Under current law, lenders are allowed to set the terms of their loans from 10 to 31 days, and can charge up to a 17.5 percent fee for the loan; giving a loan with payment due in 14 days an annualized interest rate of 456 percent. SB138 seeks to drop this rate to 200 percent by requiring payday lenders to give borrowers 30 days to repay their loans. Decatur-Republican Sen. Arthur Orr, the bill’s sponsor, believes it is a simple, but necessary change, and will make repayment easier for Alabamians who pay their loans monthly, alongside their household bills. “This simple reform enjoys bipartisan, overwhelming, statewide support, we are grateful for the responsive leadership that carried this bill through the Senate. Now, we look toward the House seeking the same level of commitment to the well-being of Alabama’s borrowers. Predatory lending reform is a priority for many Alabama voters who are tired of seeing this can kicked down the road year after year, and this bill is an opportunity for legislators to finally deliver on the change that their constituents have requested for so long.” Dana Sweeney with the Alabama Appleseed Center for Law & Justice, told Alabama News. Madison-Republican Sen. Bill Holtzclaw, Rainbow City-Republican Sen. Phil Williams, and Birmingham-Democrat Sen. Rodger Smitherman are co-sponsors of the bill.
30 Days to Pay bill would extend time to repay payday loans
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.
