BIRMINGHAM (TAB) — A bill was approved today by a Senate committee that would cap the interest rate that payday lenders can charge customers and extend repayment times.
The bill would limit interest rates to 180 percent and extend the terms of repayment to six months. The legislation was sponsored by Sen. Arthur Orr, R-Decatur, who said the bill “does modify what we have today and tries to allow the product to be available to those who need access to capital funds (and) short-term loans without potentially running folks out of business,” according to Montgomery Advertiser. Orr’s bill is based on a Colorado law that went into effect in 2010.
Along the same vein, the Southern Baptist Convention’s Ethics & Religious Liberty Commission (ERLC) joined other faith groups in calling for payday lending reform in a Feb. 11 letter to the U.S. House Subcommittee on Financial Institutions and Consumer Credit in Washington.
Altogether forming the Faith for Just Lending coalition, joining ERLC is the National Latino Evangelical Coalition, National Baptist Convention, Center for Public Justice, Cooperative Baptist Fellowship, Ecumenical Poverty Initiative, PICO National Network and United States Conference of Catholic Bishops. Representing 92 million Americans, the coalition said payday lending businesses prey on the poor and bank on the likelihood that the borrower will not be able to pay the loan off on time, resulting in mounting debt with rates as high as 465 percent.
The coalition is calling for a balance between the market need for credit and the need for consumer protection.
Messengers to the 2014 SBC annual meeting approved a resolution that denounced predatory payday lending and called on the adoption of government policies to end the practice. And messengers to the Alabama Baptist State Convention annual meeting in November 2014 also passed a resolution condemning the excessive interest rates charged by payday and title loan companies.