Two weeks ago a House committee heard some compelling testimony on a bill that would curb exorbitant interest rates on so-called “payday loans.” Today it’s the Senate’s turn, as the Corporations Committee will discuss Sen. Juan Pichardo’s version of the legislation.
And according to a press release, Pichardo seems pretty confident the bill will become law.
“With strong support from both sides of the aisle, Senator Pichardo and advocates for the legislation have high hopes for eliminating the cycle of debt caused by high-interest payday loans,” said the release.
Indeed, much of the opposition to the bill comes from special interest lobbyists, such as former House Speaker Bill Murphy.
The bill would lower the annual percentage rate on payday loans from 260 percent to 36 percent.
There were 143,201 payday loans made in Rhode Island last year for a total of more than $53 million, said Margaux Morisseau, with NeighborWorks Blackstone River Valley, a community-building non-profit based in Woonsocket. Only 2 percent of payday loans she said go to people who pay them all back and don’t take out another one.
While detractors of the bill say this is the only way some people can get a loan in a bind, Morisseau said there are several other options. In an email she detailed a few of them:
- Capitol Good Fund lends $2000 loans at 15% APR. Their customers have taken out CGF loans to help get out of the payday lending debt trap.
- West Elmwood Housing Development Corporation is piloting the “Neighborhood Loan Store” that makes loans up to $1500 at 18-25% APR.
- Navigant Credit Union also recently launched “Smart Start” a safe, easily accessed alternative product at all of their branches. They loan $600, with a 90 day term, no credit required.