By Lee Hedgepeth
Alabama Political Reporter
Citizen-activists and lawmakers gathered on the steps of the State House this week in support of a package of bills that would curb what they see as predatory payday and title lending practices.
Groups including Alabama Appleseed, the AARP of Alabama, the Alabama NAACP, the Vulcan Legal Group, and the Alabama Federation of Republican Women were all represented at the event, spotlighting the bipartisan nature of the effort.
Payday and title lending has become a huge concern around the state as of late. The Alabama Political Reporter has reported on a rash of moratoriums on new payday loan business licenses around the state, with more than a dozen cities taking specific action.
Currently, payday and title loans are largely unregulated due to a carve out for their business model in current regulatory statutes which allows for high interest and turnover rates. Right interest rates can be as high as 456% annually. According to statistics from the Alliance for Responsible Lending, of which most these groups are members, “the average payday borrower takes out more than ten loans, paying $574 in interest on a loan of under $400. The average borrower is indebted for 199 days.
The proposed new regulations would cap the interest rate at 36 percent, which is the current cap on interests rates for similar loans in the military.
Proponents of the package of bills, which includes both payday and title loan legislation, have hope that the bill will at least be passed out of committee this year, with the legislation receiving some bipartisan support in both houses. Last year, similar legislation stalled when it was assigned to subcommittee.
In the House of Representatives, for example, Democrat Rod Scott, the sponsor of the title loan bill, said he has over fifty cosponsors, enough to pass the bill if it is put to a vote.
Patricia Todd is sponsoring the payday loan bill in the House; her comments at the event are available here.
Alabama Appleseed’s Legal Director Shay Farley answered APR’s questions about the bill.
Senator Beason, (R) has taken up the charge of getting the legislation passed.