Payday loans are marketed as a quick financial fix but in reality create an inescapable debt trap. Payday lenders charge excessive rates, take access to a borrower’s bank account for repayment, and make loans with no regard for a borrower’s ability to repay without refinancing or defaulting on other expense. As a result, they lead to harms such as overdraft fees, bank account closures, and bankruptcy.
Payday lenders already charge low-income Hoosiers rates at as 317% annual interest! And, yet, tomorrow the IN House will hear a bill in which out-of-state payday lenders will seek permission to make another, even more dangerous payday loans.
HB 1340 will legalize a new type of predatory payday loan in Indiana. Under the proposal, the rates on the loan reach as high as 288% APR for a 24-month payday loan. As an another example, a $600 loan due in 12 months, will cost $2,040 to payback – more than three times the original loan amount. Here is link to the bill: https://iga.in.gov/legislative/2016/bills/house/1340#document-f0dbae5a
These types of high-cost loans are so unsafe, the U.S. Department of Defense prohibits them from being made to active duty military by imposing a cap of 36% for these types of loans. However, this protection does not extend to veterans. Thus, HB 1340 exposes veterans and other Hoosiers to these harmful loans.
The bill sponsor is Rep. Woody Burton, and it scheduled for a hearing during the Committee on Financial Institutions at 3:30pm tomorrow, Wednesday, January 27, 2016.
We need to take action now. Our legislators should be reining in predatory payday lending practices, not expanding it.
There are two actions to take now:
1. Come to the Committee Hearing tomorrow at 3:30. RSVP to Kelsey Clayton at firstname.lastname@example.org if you can come.
2. Call members of the House Committee on Financial Institutions. Contact information is below. Tell them to vote no to the payday lenders, vote no on HB 1340 or click here to send a composed message to your Representative. Click on the advocacy campaign button when you land on the policy center page.
You can also use the list below to contact the committee directly.
Representative Woody Burton (Chairperson)
Representative Robert Heaton (Vice Chair)
Representative Greg Beumer
(317) 234-9447 (Statehouse)
Representative Wes Culver
Representative Richard Hamm
Representative Sharon Negele
Representative John Price
The Honorable Donna Schaibley
Representative Thomas Washburne
Representative Justin Moed (Ranking Minority Member (RMM))
Representative Philip GiaQuinta
Representative Gail C. Riecken
Representative Robin Shackleford