The payday loan industry is liquid in the sense that changes are always being made to better assist consumers. While some states may work to prohibit the use of payday loans, others try to make them a safer financial solution to offer more choices. No matter what the intention is, here are 6 states with recent payday loan legislation changes:
1. Delaware
The state of Delaware is currently trying to impose a limit on the number of payday loans a borrower can take out over a 12-month period. Under House Bill 289 (HB 289), this would limit borrowers to only be able to have a maximum of 5 payday loans of $1,000 or less per 12-month period. This bill also includes a definition change of short-term loans so that the limit will be increased to $1,000 instead of $500.
Under HB 289, a database would additionally be implemented to keep track of how many payday loans is taken out by a single borrower.
2. Illinois
In 2012, a new bill (HB 537) was introduced into the legislation governing the payday loan industry to reduce how much consumers should pay in financial fees. Under HB 537, interest rates that exceed 99% are not considered legal for 2012. Additionally, the loan amount must correspond to a borrower?s income above all else. However, this bill is not beneficial to payday loan companies because they cannot charge the higher rates they need to make desirable profits.
3. Pennsylvania
PA Representative Chris Ross
In June of 2012, the State House of Representatives approved a bill (HB 2191) to legalize the lending of payday loans. However, no decision has been made about whether or not the bill will be reviewed before the summer break. The bill is meant to provide consumer protection because, according to Rep. Chris Ross, R-Chester, the lending practice is already happening through out-of-state and Internet lenders. With the bill, the lending practices will be regulated to ensure that consumers are protected.
With HB 2191, obtaining new loans will be prohibited until existing ones are paid off. Payday loans will also be capped at $1,000 or 25% of the gross monthly income (whichever is lower). Additionally, the finance charge will amount to $12.50 per $100 borrowed with an added $5 fee.
4. Maryland
Although Maryland currently prohibits payday loans, a proposal in the US House of Representatives may soon change that. Under HR 1909, a charter would be created for credit companies and federal financial services to oversee payday advance lenders. However, there are those that feel that the bill will allow payday loan lenders and other non-bank financial service providers to avoid the strict regulations implemented by state bank regulators and the federal Consumer Financial Protection Bureau.
5. Texas
Throughout Texas, city councils are currently working hard to regulate payday loans, but are being met with opposition from lobbyists of the payday loan industry. Despite the efforts of the city councils to enforce consumer protection, nothing directly connected to the business model has yet been passed in the latest legislature session.
GA Attorney General Samuel Olens
6. Georgia
Although it does not strictly have to do with changes in legislation, in 2012, three companies (Payday Financial LLC, Western Sky Financial LLC, and Green Billow LLC) were pressured into ending their services within the state. Since payday loans are illegal in any form in Georgia, Samuel Olens, the Georgia Attorney General, made it very clear that out-of-state lenders skirting around Georgia laws will not be tolerated.
With every state having a different payday loan legislation, it is crucial to know your rights as a borrower before obtaining any loans. By consulting with official government resources and practicing responsible borrowing, you can use payday loans to cover financial needs.
Source: https://www.paydayloantree.com/blog/payday-loan-legislation/
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