The bill would ensure a lender could not charge more than 36 percent interest on a payday loan. Right now, they have the ability to charge 391 percent. If the measure passes, users would see a drop in fees by over 90 percent. Many states have passed laws similar to Indiana’s, and in 2006, former President George W. Bush instituted a 36 percent cap for active-duty military members.
Erin Macey, a senior policy analyst with Indiana Institute for Working Families, said a poll carried out by Bellwether Research and Consulting shows the majority of Indiana residents are in favor of the change and hope the bill passes.
She said most people understand the payday loan lending model was developed on lending people are unable to repay at the sky-high rates charged.
Brian Burdick is a lawyer with Barnes and Thornburg representing payday lender Check Into Cash. He spoke with the Senate Insurance and Financial Institutions Committee, saying such laws like these means even more harm to consumers in states that have passed similar laws.
According to Burdick, those individuals turned to online lenders or a loan shark to get the money they needed to pay their bills.
The committee, hearing three hours of testimony, decided to table the vote.