To the surprise of some statehouse observers, a payday lending bill was passed this year, darting under the wire on the last day of the regular legislative year. That marks the first additional restrictions put on the industry since state lawmakers first allowed its existence in 1998. It’s now a $155 million industry.The House passed legislation four months earlier but it took that long for the House and Senate to agree on a plan.
York County Senator Wes Hayes led the call for restrictions in the Senate. He says the final bill was a little stronger than the House version and is definitely an improvement above current law.
Hayes says the big change is that borrowers would be limited to one loan at a time. The measure implements a state-run database to enforce that. “Currently you can have as many payday loans as the places will loan and often the people who get in trouble have multiple loans, six or seven loans, and they’re basically borrowing from one to pay another, and it’s a cycle of debt they’ll never get out of.”
According to the new law, there is a one-day waiting period between loans. After the first seven loans, there is a two-day waiting period between loans.
The bill also drops the total a person can receive in a loan by $50. Consumers would be able to borrow up to $550 at a time. The maximum payday loan now is listed at $300 but Hayes says a loophole allows borrowers to take out two loans, up to $600 total.
Hayes says lawmakers don’t need to pat themselves on the back and say that they’ve sufficiently regulated the industry, but they need to continually monitor it. “There’s a need out there that forces people to go to payday lenders, or title lenders or pawn shops. It’s hard for people who have pressing financial needs to get from paycheck to paycheck, if they have bad credit or no collateral.”
The final agreement passed this year when Darlington Democrat Gerald Malloy lifted his objections. For a while Malloy had insisted on a stronger bill, or on no change at all.