Payday Loan House Bill for Pennsylvania

According to CFPB, most loans are for hundreds of dollars and are charged with $15 or $20 for every $100 borrowed. Payday loans typically have a two-week term and fees amount to a percentage rate between 391 percent and 521 percent every year.

Depending on the state law, loan amounts and finance charges can differ. If the borrower fails repay the loan in full by the time the due date comes, then the lender is allowed by the loan agreement to cash the check of the borrower in order to get repayment.

There has been an increase in payday lenders across the country within the last two decades. Moreover, payday loans can now be availed online, with the arrival of new media.

According to the report from PBS during the month of May, almost 19 million US households use payday loans. According to industry analysts, this totals to $30 billion in short-term credit annually. While this is not yet a problem for Pennsylvania, it could be in the near future.

Philadelphia Daily News reported that Republican state Rep. Chris Ross sponsored a House bill that would introduce short-term lending to Pennsylvania, where it was originally forbidden. Ross believes that by doing so, a safer alternative will be offered to Pennsylvanians who currently take on loans from Internet companies that can resell their personal information.

According to John Rabenold, a lobbyist for payday lender Axcess Financial, the House bill is considered to be an opportunity for Pennsylvania residents that would provide jobs and cash for financial literacy programs. In addition, Rabenold said that he is aware there is a demand for short-term credit and there is also a supply for it, but he thinks that there is a cheaper and better way of service.

However, Diane Standaert, legislative counsel at the Center for Responsible Lending, opposes the legislation and said that it is a very bad idea.

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Filed under: payday loans • Personal Finance • personal loans

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