Competing Payday Loan Legislation At Indiana Statehouse
By Mike Perleberg
(Indianapolis, Ind.) – A pair of Indiana lawmakers are looking to change the rules for payday loans in the state.
Organizations including Prosperity Indiana and the Indiana Institute for Working Families are pushing lawmakers to curtail predatory lending products such as payday loans. A poll commissioned by the two groups along with Brightpoint shows 88 percent of 600 Indiana registered voters either strongly favor of somewhat favor reducing the interest cap on payday loans to 36 percent.
“These high-cost loans have devastating consequences for borrowers and for community stability. With Hoosiers expressing overwhelming support for a rate cap and efforts to reign in payday lenders’ abusive practices, you have to wonder why we would ever consider legislation to expand these products and increase fees instead,” said Steve Hoffman, President and CEO of Brightpoint.
Fifteen other states already cap payday loan interest rates at 36 percent or less.
Two Indiana bills dealing with the short-term loan industry each seek to institute such a cap in Indiana, but they bills also contain some major differences.
State Senator Greg Walker (R-Columbus) has filed Senate Bill 325, which is supported by Brightpoint and others. It would limit the amount of interest that lenders can charge at 36 percent. That’s far less than what the loans cost now with a 391 percent APR.
SB 325 is assigned to the Senate Insurance and Financial Institutions Committee, which is chaired by Sen. Chip Perfect (R-Lawrenceburg).
House Bill 1319 by State Rep. Martin Carbaugh (R-Fort Wayne) creates a new installment loan product exclusively for payday lenders with an annual interest rate of 45 percent and APRs around 200 percent. It would also allow the lenders to increase fees such as convenience charges. The bill would also expand the size of loans that people can get from a payday lender.
According to The Indianapolis Star, data from the Indiana Department of Financial Institutions shows there were 1.2 million payday loans made in state in the most recent trailing 12-month period.