Advocates are again pushing for legislation that caps payday loan rates

Advocates are again pushing lawmakers to pass legislation that would cap annual percentage rates of small loans. Hoosiers for Responsible Lending wants rate caps put in place to help protect thousands in the state from predatory lending.

The coalition consists of veterans organizations, faith communities, consumer groups and social service providers. The group supports legislation from both Sen. Ron Alting (R-Lafayette) and Rep. Carey Hamilton (D-Indianapolis) that would cap payday loans at a 36 percent interest rate. 

“I have for four years been listening to the predatory lending industry try to defend themselves and make a case for why they should exist in our state. And I have not been convinced, frankly, I find their arguments defenseless,” said Hamilton, author of House Bill 1159. “We have an obligation to protect vulnerable users from this industry. It's an industry that hurts every single user that it comes across. And it only benefits the mostly out-of-state owners of these facilities that loan in our communities.”

Indiana is one of 25 states without strong rate caps on payday loans. This means lenders can have annual percentage rates as high as 391 percent. 

Angela Espada, executive director of the Indiana Catholic Conference, said the U.S. Conference of Catholic Bishops has tried for years to get state and federal lawmakers to limit interest rates and protect vulnerable populations.

“You may hear people say who are associated with payday lending, ‘Well, it’s because these are high-risk individuals,’” Espada said. “Well, when you can take money in some states directly out of a paycheck, that's not really high risk. That's about as secure as you can get.”

Marie Morse is the executive director of HomesteadCS located in Lafayette. The nonprofit works with families and individuals by providing alternative lending to predatory loans. Morse said her organization would like to see all Hoosier families have access to affordable interest rates.

“Since beginning our program in 2016, we have loaned over $2 million and have saved our families over $3 million in interest,” Morse said. “And this is money they so desperately need to save for their housing.”

A 2018 survey conducted for the Indiana Institute for Working Families and Prosperity Indiana found that 88 percent of Hoosiers approve of a 36 percent rate cap on payday loans.

Both HB 1159 and Senate Bill 253, authored by Alting, have been assigned to committees, but have not been scheduled to be heard yet. Similar bills filed in previous sessions have failed to pass. 

Contact reporter Samantha at shorton@wfyi.org or follow her on Twitter at @SamHorton5.

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