Legislation that would lower allowable interest rates for payday lenders will now go to the floor of the Indiana Senate.
The Insurance and Financial Institutions Committee passed the 6-2 bill on Wednesday.
The law project would limit payday lenders to an interest rate of 36%, a reduction of more than 90 percent of the current limit of 391 percent for a two-week loan of $ 650 or less.
Indiana Institute for Working Families senior policy analyst Erin Macey says she hopes the bill reaching the Senate will help raise awareness of the risks of payday loans.
“I think reality is like a garden with weeds in it,” Macey says. “Payday loans are there, they are marketed aggressively to low income families and if we can pull them off the market, borrowers will find some of the most affordable and best options out there.
Some of those opposing the bill say loans are cheaper than having a bad check and Hoosiers risk turning to online and tribal lenders for the money.
While Macey says it’s a step forward, another bill dealing with with small loans could cause a setback.
“While we saw victory today, we could see an even more dangerous and more predatory product coming out of a different committee tomorrow,” she said. “So the fight is clearly not over.”
The bill has until Tuesday to exit the Senate.
