Stay Informed!

By Ethan Geiling on 07/27/2011 @ 03:45 PM

Tags: Assets & Opportunity Initiative

During the 2011 legislative session there was—and continues to be—significant action at the state level around the regulation of payday, car-title, and other small-dollar lending.

• On July 6, New Hampshire Governor John Lynch vetoed a bill that would have drastically raised the maximum amount car-title lenders could charge in interest. Car-title loans are currently capped at 36% APR in New Hampshire.

• The North Carolina legislature introduced a bill this session that would have raised the rates and fees installment loan companies could charge. The U.S. military and a number of consumer advocacy groups opposed the bill, which advocates believe is essentially dead.
• Two bills were signed into law in Texas that will increase regulatory oversight over payday and car-title lenders.
• In California, a bill that would raise the maximum payday loan amount from $300 to $500, is moving through the legislature. The bill passed the Assembly and has been referred to the Senate Judiciary Committee.
• A panel of judges in Wisconsin asked the state Supreme Court to decide when interest rates on payday loans become excessive. A bill to cap payday loans at 36% was also introduced this session.

Montana is the most recent state to cap small dollar lending. In November 2010, Montana passed a ballot initiative to limit annual interest rates on small dollar loans at 36%. Montana Women Vote, AARP Montana and Assets & Opportunity partner Rural Dynamics were instrumental in organizing the “400% Interest Is Too High – Cap the Rate Campaign” to get the initiative on the ballot. 72% of voters backed the measure, illustrating the bipartisan appeal of the issue.

Seventeen states currently prohibit payday lending or effectively ban the practice by mandating an APR of 36% or less.

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