SENATE APPROVES PAYDAY LOAN LIMITS
(AUSTIN) — Consumers would gain additional protections when financing short term loans, called payday loads, under a bill approved by the Senate late Monday. Critics say that some short term lenders rack up interest rates against customers and make it virtually impossible for them to ever escape debt. The bill passed Monday includes tough regulations on interest rates and seeks to prevent a number of potential abuses. "It's important to consumers because in some instances the reported APRs on the products exceed one thousand percent," bill author Senator John Carona of Dallas said of his bill. "I don't believe any of us can feel good about that."
The bill was amended fifteen times before being passed. As amended, the bill would cap the annual percentage rate of short term loans at 36 percent, which matches the limit the federal government has placed on short term loans to military service members. It would also allow consumers to make partial repayment of the principle in installments, rather than paying back the entire loan plus interest at once, which is required in many of these loan agreements. The bill was amended to not preempt city ordinances that might be more restrictive, and under the bill, companies that violate the proposed regulations would face fines and would be open to civil suits from customers. The bill now heads to the House for approval.
The Senate will reconvene Tuesday, April 23 at 11 a.m.