Yet again changes are being awaited in the state of Alabama with regards to payday loans. At the end of October Mobile organization leaders and legislators met for the discussion of the topic that has long been bothering everyone – payday lending in the state. There has again been introduced a suggestion to cap payday loans at 36% and in doing so to make an attempt at a more effective regulation in the sphere.
In August the Alabama Banking Department started tracking payday lenders and even succeeded with the law that allowed loans not more than $500 a time. However, statistic is still pretty high as in accordance with a recent research about 462,209 payday loans were taken recently with the total loan amount about $146 million – all this for the period of ten weeks.
There have been many complaints about high interest rates of payday loans and also short term of their repayment; however, the opinion differ mostly because there is no alternative to such loans that consumers can rely on in the same way. Still, it seems that the majority is in favor for better consumer protection and stronger regulation.
Alabama Appleseed company votes for the stricter laws for payday lenders as the numbers are really impressive and not in a good way. The representatives suggest that step should be made to make the industry more affordable and less stringent for customers; however, they do not see payday loans elimination as a way out.
At the present moment the following steps are discussed: to cap payday loan interest rate at 36% instead of the 3-digit number interests in APR payday lenders can charge at the present moment. However, the owners of payday loan businesses do not see it like a beneficial solution. They say that it won’t help consumers at all as there is no alternative to small cash loans like this and with the introduction of 36% cap lenders are likely to close their businesses and people will have no option whatsoever. It happened in several states already.
At the present moment payday loans online are getting more and more popular and as many as 50% of all credit transactions are made online. The problem is that many people tend to take one such loan and after failing to repay in time, they have to take another or roll-over. This is what makes the industry so dangerous – it gets a lot of people into a debt circle.
Similar attempt at introducing stricter payday loan legislation was made last year; however, it was unsuccessful. It will surely be the issue in the next legislative session; however, in the meantime payday loans are still available and their high interest rates and short repayment term don’t stop customers.