Last month, the Michigan House of Representaives passed House Bill 5097, a measure to expand payday lending in Michigan. This bill had been in committee since October 2019. The bill, which is sponsored by Representative Brandt Iden (R-Oshtemo Township), would provide payday lenders the authority to offer small loans of up to $2,500. The current limit is $600.
Michigan Catholic Conference (MCC) has raised several concerns about HB 5097. We as Vincentians also have the following issues about the legislation:
- Charges borrowers an exorbitant 132 % (APR), or an eleven percent interest rate per month.
- Lacks adequate consumer protections.
- Cycle of debt: the federal Consumer Financial Protection Bureau has shown that over 70 percent of borrowers take out another loan the same day one is paid. Approximately 90 percent of borrowers take out another loan within 60 days.
- Does not require the borrower's payments to be put towards the principal of the loan.
- Provides no limit to the length of the loan (ex. $1000 loan can turn into $2000).
Share your concerns with your State Senators and urge them to oppose HB 5097 if it comes before the full chamber: act now!