Interest on ‘Payday Loans’ Would be Slashed In HB 1404 Filed by Rep. Mickey Dollens
OKLAHOMA CITY (7 February 2017) – “Predatory” lenders imposing “unfair and abusive” loan terms on “people who feel as though they have nowhere to turn” resulted in a bill by a first-term legislator to slash the interest rate on so-called “payday loans”.
A lender “shall not charge an annual percentage rate greater than 60%” for any loan issued “pursuant to the Deferred Deposit Lending Act,” decrees House Bill 1404 by state Rep. Mickey Dollens. Currently the ceiling on a payday loan is 390%, the south Oklahoma City Democrat said.
“Again and again, while I was knocking doors on the campaign trail” last year, “I would hear about the need for better regulation on payday loans,” Dollens said. Lowering the APR “would help prevent vulnerable borrowers from drowning in a cycle of debt,” he said.
According to the Oak View Law Group of Los Altos, CA, the maximum amount of a payday loan in Oklahoma is $500, for a duration of 12 to 45 days. The fees and finance charges are $15 for every $100 (up to $300) plus $10 on every $100 advanced above $300. The finance charge on a 14-day $100 loan is $15, and the APR on a 14-day $100 loan is 390%.
The proposed ceiling of 60% “would allow small-business owners to pay their bills without imposing devastatingly oppressive interest rates on vulnerable borrowers,” Dollens said.
Payday loan companies collected more than $52 million in fees and interest in Oklahoma in 2014, Dollens said. “That’s a lot of money going into just a few pockets,” he said. “Not only that, but these lenders have been shown to target young people, immigrants who have come into our state to pursue ‘the American dream’, and minority populations. In addition, they target our military personnel, which is disgraceful.”
The state Department of Consumer Credit, which regulates deferred deposit lenders (companies that extend what are commonly referred to as payday loans), reported that 944,712 DDL loans totaling almost $392 million were made in this state in 2014 (the latest year for which such data is available).
“We need to explore long-term solutions – such as micro-lending and providing a living wage – so that families who turn to these lenders can have other options to fulfill their day-to-day needs,” Dollens said.
HB 1404 was assigned Tuesday to the House Committee on Banking, Financial Services and Pensions.
MIKE W. RAY
Media Director, Democratic Caucus
Oklahoma House of Representatives
(405) 962-7819 office
(405) 245-4411 mobile