Penny Fisher says she got caught in the payday loan trap.
“I borrowed $300 back in ’95, and ended up paying $4,983.30 back.”
Thelma Fleming had two jobs, and lost one. She went to a payday lender to borrow money to pay her bills.
“And I borrowed $300. That really changed my life because I lost my car. My checking account was closed.”
State Senator Ben Nevers of Bogalusa says enough is enough.
“We need to put a stop to predatory lending--do whatever is necessary to stop it.”
Advocates for payday lending reform—including lawmakers, Together Louisiana and the AARP—rallied on the state capitol steps Tuesday, supporting bills to cap the amount of interest these short-term lenders can charge.
Rev. Errol Domingue of Together Louisiana notes the state already has a law prohibiting loan-sharking, which is defined as charging more than 45-percent annual interest. It classifies loan-sharking as a felony.
“So how do payday lenders get away with charging interest rates of 16.75 percent for a two week period, which is 436 percent on an annualized basis?” Domingue asks.
It’s because payday lenders have gotten an exemption from the law. Sen. Nevers told the assembled crowd he would be filing a bill this week to remove that exemption.
“I will file a bill that will put predatory lenders that charge more than 45 percent per annum in jail,” Nevers promised, adding, “And they’ll face a fine of ten thousand dollars or more.”
Nevers and Baton Rouge Rep. Ted James have each already filed bills to cap interest on payday loans at 36 percent per year. Committee hearing dates have not yet been set for those bills.