KCRL Supports House Bill 381-A Proven Solution

9 02 2010

Payday Lending Bill Introduced in 2010 General Assembly

Rep. Darryl Owens joins with Co-sponsors and KCRL to introduce House Bill 381 seeking 36 percent interest cap on payday loans.

FRANKFORT, Ky. – The Kentucky Coalition for Responsible Lending (KCRL) joined with Rep. Darryl Owens (D – 43) and his Co-sponsors to introduce  House Bill 381. The bill seeks to protect consumers from being snared in a spiraling debt trap by enacting a new 36 percent interest rate cap on payday loans.

Marketed as short-term relief in a cash crunch, payday loans in Kentucky carry annual interest rates of 400 percent and regularly catch working people – or those with a steady source of income such as Social Security or a disability check – in a long-term debt trap. Over 40 % of borrowers believe payday loan interest rates are less than 30% APR, when in fact rates in Kentucky are at least 391% APR—and often exceed 400%. Nationwide, 9 out of 10 payday loans are made to repeat borrowers who take out nine or more payday loans in a year—a “cycle of debt”

“We believe this is a needed step to protect Kentucky consumers from a predatory product that costs hard working families approximately $150 million a year,” said Kip Bowmar, Executive Director of Community Action Kentucky and KCRL member organization. “We salute Rep. Owens and the 19 co-sponsors on this important legislation,” added Bowmar.

 

According to KCRL Chair Amy Shir,“We are in the middle of the worst recession since the Great Depression and we don’t want see working Kentucky families’ hard earned money stripped away by a predatory financial product.” KCRL consists of 64 organizations statewide representing hundreds of thousands of Kentuckians. “And, during tough budget times for the state, this bill doesn’t cost a thing and it protects Kentucky consumers. This is a win-win bill,” said Shir.

Support House Bill 381

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