To: The Rhode Island State House, The Rhode Island State Senate, and Governor Gina Raimondo
Rhode Island: Eliminate predatory payday loan interest rates
Demand that the Rhode Island General Assembly enact legislation during the 2013 Session that establishes a 36% annual interest rate cap on all payday loans issued in Rhode Island.
Why is this important?
As a resident of Rhode Island, it is saddening and frustrating to know we are the only New England state that permits a payday loan at an annual percentage rate above 36 percent.
State law currently allows lenders to charge as much as 260 percent interest.
When the Rhode Island's House Committee on Corporations began considering legislation to reduce the rate earlier this year, the House bill was co-sponsored by 50 of 75 representatives; the Senate version, by 26 of 38 senators. A broad coalition of community groups sought to cap the interest rates on these so-called "payday loans'' but it did not make it out of committee.
Payday loans are deceptively marketed as a short term solution to my neighbors with financial problems. However, a family that couldn't afford to pay living expenses before obtaining a payday loan cannot shoulder the additional burden of triple-digit interest. Once the cycle begins, borrowers typically take out larger loans with larger interest payments. The payday loan becomes a long-term obligation where the interest paid far exceeds the loan obtained.
This trap undermines choice and competition in the market and allows millions of dollars to flow out of our economy to large, out-of-state national payday lending chains.
Lobbyists sent by the payday lending industry argue that Rhode Islanders could not survive without payday loans. In truth, we survived for decades without them, just as military families and the residents of every other New England state do today.
It is time to vote on a bill to reduce payday loan rates.
State law currently allows lenders to charge as much as 260 percent interest.
When the Rhode Island's House Committee on Corporations began considering legislation to reduce the rate earlier this year, the House bill was co-sponsored by 50 of 75 representatives; the Senate version, by 26 of 38 senators. A broad coalition of community groups sought to cap the interest rates on these so-called "payday loans'' but it did not make it out of committee.
Payday loans are deceptively marketed as a short term solution to my neighbors with financial problems. However, a family that couldn't afford to pay living expenses before obtaining a payday loan cannot shoulder the additional burden of triple-digit interest. Once the cycle begins, borrowers typically take out larger loans with larger interest payments. The payday loan becomes a long-term obligation where the interest paid far exceeds the loan obtained.
This trap undermines choice and competition in the market and allows millions of dollars to flow out of our economy to large, out-of-state national payday lending chains.
Lobbyists sent by the payday lending industry argue that Rhode Islanders could not survive without payday loans. In truth, we survived for decades without them, just as military families and the residents of every other New England state do today.
It is time to vote on a bill to reduce payday loan rates.