Payday loan regulation

Action alert - Regulation of Payday Loans

Support SF 113

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Payday loan regulation
 
The Iowa Catholic Conference supports Senate File 113. It would restrict payday lending by capping the maximum interest rate at 36 percent. Currently interest rates can reach up to 400 percent.
Payday loans are short-term cash advances, usually for $300 to $500, based on the borrower’s personal check held for future deposit (the next pay day), or on electronic access to the borrower’s bank account.
Payday loans would not pose a concern if borrowers could typically pay off a loan with their next paycheck. Unfortunately, in practice, payday loans prove to be a long-term debt trap, not a quick financial fix. Because of these high fees and short terms, borrowers usually cannot both repay their payday loan in full and meet the rest of their monthly expenses.
As a result, a typical payday loan borrower in Iowa has 12 payday transactions per year, usually on a back-to-back basis. Only one percent of loans are made to one-time borrowers.
We believe the effective interest rates of these loans are unjust. Instead of promoting the financial stability of consumers, the system actually creates a financial incentive in the failure of families rather than their success.
Help reform payday lending for all Iowans. Please send a message to your Senator in support of SF 113.