On Monday we blogged about AB 377 (Mendoza), which will allow Californians to publish a check that is personal as much as $500 to secure a quick payday loan, up somewhat through the present optimum of $300. A borrower who writes a $500 check to a payday lender would get a $425 loan вЂ“ which must be repaid in full in just two weeks or so вЂ“ and pay a $75 fee under this proposed change. ThatвЂ™s a serious payday for payday loan providers. But significantly more than that, a more substantial loan size may likely boost the amount of Californians whom become repeat payday loan borrowers вЂ“ settling one loan after which straight away taking right out another (and another) since they lack adequate earnings to both repay their initial loan and fulfill their basic bills for the following fourteen days.
The Senate Banking, Finance and Insurance Committee heard the bill on Wednesday, and things failed to get well for the billвЂ™s opponents, whom included the middle for Responsible Lending and Consumers Union. The committee passed the balance on a bipartisan 7 1 vote. The committee decided that allowing payday lenders to make much larger loans is sound public policy despite overwhelming evidence that payday loans trap many borrowers in long and expensive cycles of debt. One Democrat asked rhetorically: вЂњIs the industry ideal? No. Does it provide a credit that is valuable for Californians? Definitely.вЂќ
This concern about credit choices ended up being echoed by a number of committee people. Continue reading Cash advance shop had been sued by the state for neglecting to protect their clientsвЂ™ information.