Councilman seeks stricter regulation of payday loan industry - WAFF-TV: News, Weather and Sports for Huntsville, AL

Councilman seeks stricter regulation of payday loan industry

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Payday loan interest rates average 200%. Payday loan interest rates average 200%.
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HUNTSVILLE, AL (WAFF) -

The Huntsville City Council approved a resolution Thursday that requests state lawmakers to tighten up its restrictions on the payday loan industry.

Council member Bill Kling introduced a resolution to stop what he calls "predatory lending" at payday loan-type businesses. Kling said he has heard dozens of stories from people who feel duped by these quick-cash businesses, and that most complaints come from low-income and elderly people.

Kling said Thursday that the city does not have jurisdiction over these businesses, but the state does. He is trying to get the Alabama state legislature to listen and toughen up its laws. This year, legislators did introduce some regulation, but Kling said they dropped the ball.

"Next thing you know, they're locked in," said Kling regarding payday loan holders. "And they can't afford to pay back the principal and they are just barely making the interest payments. They're hurting, and by the time they get everything paid off, the interest can be twice as much as what the original loan was for."

The interest rate averages about 200%, much higher than an average bank loan of about 10%.

The resolution agreed upon Thursday night requests that Alabama lawmakers enact a bill during the 2014 legislative session to further regulate predatory lending practices.

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