Payday loans bill would limit lenders' power - | WBTV Charlotte

Payday loans bill would limit lenders' power

By Derrick Rose Bio | Email | Twitter

WASHINGTON, DC (WBTV) - Payday lenders would have a tighter leash and less power if a bill limiting their controls is passed.

Senator Kay Hagan (D) NC, introduced Senate Bill 3245 Thursday,  in hopes of providing a lifeline for borrowers stuck in a repetitive financial hole. "I'm concerned about the consumer, what I'm doing now, I want to protect the consumer," she told WBTV from Washington Thursday.

Hagan's proposal, the Payday Lending Limitation Act, has 3 main provisions: it would limit the number of times a borrower can obtain a loan to 6 times in 1 year. The bill, if made law, would also force lenders to extend the time a person can pay back a loan, at no added cost, if the borrower can not pay on time. Finally the bill would require lenders to become licensed.

License fees would help pay for the bill, according to Hagan's office.

Hagan said lenders and their fees trap borrowers into revolving debt. "They're trying to borrow a small amount of money and yet they have to pay it back every two weeks," she said, "they roll that over and they end up paying an exorbitant amount of money to borrow a small amount of money, it's really it's a trap they get in."

Hagan feared potential bankruptcies for people who people who find themselves taking out more loans to pay for existing interest rates on previous loans.

Hagan's bill is separate from a payday loans bill that was already on Capitol Hill. That bill would cap interest rates at 36%. That bill is still under discussion. Hagan said her bill has a much better chance of passing the house and Senate.

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