A proposed law that could keep some customers of payday loans from becoming victims of payday loans is close to approval by the state senate.
The legislature has been trying to put some limits on payday loan companies for years. This time, the industry is not fighting the effort. Rogersville Senator Mike Cunningham is not trying to shut down the industry. He’s trying to limit opportunities for customers to get into trouble.
Cunningham says payday loan companies are needed because banks don’t want to make small loans of the kind a customer sought one day while he was visiting one of those stores–a few dollars to buy a new washing machine because hers had broken..
A key feature of his bill prohibits borrowers from having more than one loan at a time. And it prohibits rollover loans. Cunningham admits his bill is flawed on that point. But the alternative to the flaw is worse. “How you would enforce it, I don’t know, and when you do try that you drive people to the internet to borrow money, where you lose all control,” he says.
The bill lets people have an extended payment plan with no interest charged during that time, but not a loan to pay off a loan.
The bill can go to the House with one more favorable vote.