“This is a citizen’s movement against a very powerful financial force within this state,” Fincher explained. “Many of the top lobbyists here in Montgomery are employed by some of the payday lenders, as well, who work the floors of the legislature.”
Payday lending isn’t just popular. It’s very profitable. More than 2 million payday loans were taken out from Oct. 2015 to Sept. 2016 and 54 percent of those borrowers paid more in interest and fees than the actual amount of the loan.
That may be because the average interest rate of a payday loan is 300 percent.
“Groceries, the rent, these were ongoing costs,” Fincher stated. “They describe that once they get that initial loan, they can’t pay it off so they keep churning it, as the industry calls it. Churning is just paying the interest and getting more and more in debt.”
That’s why 30 Republicans and 15 Democrats have come together to try and pass HB 321, legislation that would cap those interest rates at 36 percent. While that may still sound like a lot, that’s still less than the maximum legally allowed of 456 percent.
Lawmakers know it won’t be easy, though.
“We are up against a very powerful financial force that will fight for its own self-preservation, I assure you,” Fincher said.
They’re counting on that bipartisan effort to get reform passed. Also helping the bill’s chances, one of its sponsors is none other than Alabama House Speaker Mac McCutcheon.
Republished from WSFA 12 News.