Cap Payday Loans at 36% In The States

A recent bill has been proposed regarding payday loans in that the New England states would like to see a cap on the payday loans so that consumers are no longer mistreated by exorbitant and unnecessary interest rates on their loans. Governor John Lynch has decided to take a cautious approach regarding the bill as it is about to enter the Senate Vote. He believes that the charges of the payday loans may put him at odds in the House and Senate. Senate President Sylvia Larsen and the House Speaker Terie Norelli are the two behind the bill. They decided that this year, 2008, needed to regulate the charges with these types of loans.

On the other hand Lynch is in support of another bill that is a companion to the payday loans bill. The bill he supports is going to create a sixteen member study commission regarding the loans. He has yet to state whether he supports the proposed bill of the 36 percent cap. Instead he is waiting for the commission to do a study regarding payday loans before he makes a move towards the other bill. Lynch would rather see the recommendations of the committee. The commission is not scheduled to have a report completed until November 14th of this year, which means the approval of the payday loans bill for a set cap would not be implemented until 2009.

Lynch has made a point to support the lenders by saying they are providing a service that may not be met. In other words if the interest rate cap makes it through legislation the companies may not survive the reduction in interest rate, and therefore it bears a committee to see where other changes could be made or if the interest rate is the right change.

Lynch believes there is a real need for the payday loans these lenders are providing to their consumers. Therefore he believes there must be some way for that need to be fulfilled and if regulating the interest rate closes the companies down the need may offer up more trouble than anyone is willing to have happen.

The Senates advocate David Gottesman believes the bill will pass with approval of the original proposal. He believes that the 36 percent cap is a rational cap and that consumers should not be paying more than that amount.

It seems the payday loan companies have been working on their own survey and have just released the results. The companies of course do not want the cap to be enforced. During the poll the companies did 72 percent said they would support a candidate that would keep the payday loans available to consumers and that reform or restriction would change how the companies could afford to offer up the loans. It seems there are 60 percent for the restrictions and 12 percent against changes or additional restrictions that could be enforced. Those polled were regular residents.

The numbers demonstrate New Hampshire’s residents believe a reform should take place, but that the companies should not be banned.

Back To Financial News February 2008

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