Advocates are once again pushing lawmakers to pass legislation that would put an end to annual percentage rates for small loans. Hoosiers for Responsible Lending wants to set interest rate caps to help protect thousands in the state from over-lending.
The coalition is made up of veterans’ organizations, faith communities, consumer groups, and social service providers. The group supports legislation from Senator Ron Alting (R-Lafayette) and Representative Carrie Hamilton (D-Indianapolis) that would put an end to payday loans at a 36 percent interest rate.
“For four years I have been listening to the predatory lending industry trying to defend itself and why it is in our state. I am not convinced, frankly, that their arguments are undefended,” said Hamilton, author of House Bill 1159. at risk from the industry. It is an industry that hurts every user it comes across. It only benefits the owners of these facilities that are loaned in our societies, and most of them are from outside the state.”
Indiana is one of 25 states that do not have strong caps on payday loan rates. This means that lenders can get annual percentage rates of up to 391 percent.
Angela Espada, executive director of the Indiana Catholic Conference, said the American Conference of Catholic Bishops has tried for years to persuade federal and state lawmakers to reduce interest rates and protect vulnerable populations.
“You might hear people who are associated with payday lending say, ‘Well, that’s because those individuals are at high risk,'” Espada said. This is as safe as you can get.
Mary Morse is the CEO of HomesteadCS located in Lafayette. The nonprofit organization works with families and individuals by providing alternative lending to predatory loans. Morse said her organization would like to see all Hoosier families have access to reasonable interest rates.
“Since our program began in 2016, we have loaned more than $2 million and saved our families more than $3 million in interest,” Morse said. “And this is the money they desperately need to save for their housing.”
A 2018 survey for the Indiana Institute for Working Families and Prosperity in Indiana found that 88 percent of Hoosiers approve of a maximum rate of 36 percent on payday loans.
HB 1159 and Senate Bill 253, authored by Alting, have both been appointed to committees, but their hearing has not yet been set. Similar bills presented in previous sessions failed to pass.
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