Los Angeles Times: Bill Would Limit Number of Payday Loans to Any One Borrower
A bill before the California Legislature would restrict the number of payday loans to any one borrower — an attempt to break the "debt cycle" that ensnares some of the state's poorest residents.
Senate Bill 515 would bar the high-cost, short-term lenders from making more than six loans a year to any borrower. The bill, set to go before the Senate Banking and Financial Services Committee on Wednesday, also extends the minimum term of a payday loan to 30 days from 15.
"We need to recognize that these low-income families are desperate to get by, and they are particularly vulnerable to this type of debt trap," said state Sen. Hannah-Beth Jackson (D-Santa Barbara), who wrote the legislation.
The industry is sizable in the Golden State, with more than 2,100 payday storefronts at the end of 2011. Roughly $3.3 billion worth of payday loans were made in 2011 to 1.7 million Californians, according to the state Department of Corporations. Individual payday loan customers took out an average of seven loans that year. According to a recent report by the Pew Charitable Trusts, many payday borrowers are coping with consistent cash shortfalls rather than emergencies. The average borrower could pay back only about $50 of their loans every two weeks.
Read the full article at The Los Angeles Times.