Bill Proposed to Curb Montana Payday Loans
By Paul RizzoPayday Loan Writer
Montana’s attorney general is promoting a bill in the next Legislature that would cap the interest rates of title loans and pay day loans but an industry official calls the bill nothing more than “sound-bite legislation.”
A piece in The Missoulian says McGrath - in an appearance in Great Falls on Thursday - noted the state’s poorest consumers are more likely to take advantage of such loans but often end up being trapped in debt.
Although the faxless payday advance lender businesses are required to obtain a license, McGrath said there is little to no regulation of the businesses.
The bill being sponsored by Rep. John Parker, D-Great Falls, would change that.
House Bill 29 would cap the annual percentage rate on cash loans and title loans at 36 percent, while ensuring that consumers only have one loan out at a time. The bill also would set up repayment plans and would cap loan amounts at 25 percent of the borrower’s net income or $300, whichever is less.
Congress also passed payday loan legislation in October aimed specifically at helping military personnel and their families. This legislation will allow for better enforcement of the federal law, as well as protect all Montana consumers, McGrath said.
Bernie Harrington, president of Montana Financial Service Centers Association, said the bill unfairly targets a single industry and would likely cause the 114 payday loan lenders in the state to shut down.
“This is great sound-bite legislation,” he said. “House Bill 29 would not allow this industry to survive in the state of Montana. “It’s a prohibition bill.”
Harrington said many people use payday advances instead of falling behind on a credit card payment or choking down a late fee or bouncing a check. Those borrowers depend on the industry, Harrington said.
“I don’t think the backers really understand the consumers they think they are trying to protect,” he said.
The bill is not intended to be anti-business, McGrath said, but level the playing field among all financial services and teach financial responsibility and accountability to borrowers.
