Payday lending reform set for debate in AL legislature

Payday lending reform set for debate in AL legislature

MONTGOMERY, AL (WSFA) - Payday lending reform will once again be debated by Alabama lawmakers during the 2018 legislative session.

Sen. Arthur Orr is sponsoring a bill that would extend the repayment periods for payday loans to 30 days. Orr says most bills, like mortgages, credit cards, and other bills are due every 30 days.

Currently, most payday loans have about two weeks before payment is due. Payday loans include high-interest rates on top of the short time in which customers have to repay them.

Payday lenders say the higher interest rates are in response to the riskiness of the loans and say they provide loans to those who may not be able to get them from a bank.

Opponents of the practice claim payday loans are predatory, catching many of its customers in a debt trap.

"On every street corner I have in Birmingham, trapping our friends our neighbors even members of our own congregation, in a cycle of debt that is nearly impossible to be set free," stated Carolyn Foster of Greater Birmingham Ministries.

"I would love it. It would mean a lot to me," Monique Howard, a payday loan customer said of the legislation. "Sometimes you might not have enough money to pay that loan off right then and there. If you get a month in advance you might be able to save up a couple of checks to pay your payday loan off," she explained.

By extending the time, proponents hope to end the debt trap.

"It will make a difference to them,  their family, and their community," said Mary Lynn Bates of the Zonta Club of Birmingham.

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