Payday loan reform bill passes Illinois House

A bill long championed by Rep. David Miller, D-Calumet City has passed the Illinois House.

"Payday-loan companies need to be regulated in a way that is consumer friendly and not further victimize people in a time of need," Rep. Miller said.

But opponents of this bill say rather than helping people, it will encourage them to seek alternate ways of finding short-term financing.

"If you restrict access to payday loans, you don't restrict the need for a loan," said Steve Brubaker, the executive director of the Illinois Small Loan Association, which represents payday-loan firms in Springfield.

Well duh! Sure they'll seek alternative ways to find short-term financing. From someone who doesn't charge over 1000% interest!

This measure would prohibit short-term lenders from lending more than $1,000 or 25 percent of a person's monthly gross income, whichever is lowest.

In addition, the bill would place a limit on fees charged by short-term lenders, capping the fees at $16 per $100 loaned. Rep. Miller said some payday-loan companies charge $44 or more per $100 loaned.

The average payday loan charges an annual interest rate of 520 percent, Mr. Brubaker said. But consumer groups have found instances of loans with interest rates greater than 1,300 percent.

If passed, Mr. Brubaker said, this measure would drive the payday-loan industry out of business in Illinois.

"It won't put anybody out of business, but it will hopefully make it a little easier for people to get out of debt," Rep. Mike Boland, D-East Moline said.

This measure is long overdue, Rep. Pat Verschoore, D-Milan, said. In most cases the people who get payday loans are "the people who can't afford to be in those positions," he added.

This is a good step in the right direction. The Dope hopes this legislation is successful in the Senate.