Payday loan bill passes state house committee
MONTGOMERY, AL (WAFF) - A bill to cut payday loan interest rates in Alabama is now on to the state house. The House Financial Services committee approved the bill in Montgomery today. It's an issue the Decatur City Council has talked about several times. The council put a zoning ordinance in place that does not allow new payday lenders to operate within 1,500 feet of another, and they have lobbied state lawmakers to do something about the high-interest rates.
Sixth Avenue in Decatur is saturated with payday lenders. Someone who takes out a short term loan could end up paying more than 450% interest on it. This legislation would increase the time to pay back a loan from two weeks to six months, cutting that rate down to 36%.
Decatur City Council President Gary Hammon said he would like to see the rate even lower, in line with credit card regulations, but added that the law would be a good way to keep people from getting gouged.
"For people that are desperate and in a bind, you don't want to eliminate their ability to get out of a bind, but you certainly don't want them to be bled dry by, basically, legal loan sharks," Hammon said. "That's going to help a lot of people that get in a bind and get desperate and don't think about, 'I'm not going to be able to pay this off in two weeks.' But a person that is just in a bind, needs a quick loan, they could pay it off in six months."
Opponents of the bill say payday loan businesses would eventually go out of business with the lower interest rates, leaving no options for people who need the loans.
There is a similar bill that passed a senate committee. Lawmakers have until June 15th to pass the bill.
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