A debate over short-term loans persists in Pennsylvania as the state Capitol moves into its final session days.
San Francisco, CA -- (SBWIRE) -- 10/26/2012 -- Senators debated a measure that would allow the state Department of Banking to allow businesses to offer short-term loans. The loans, known as “payday” loans, would be capped and compliance tracking would be utilized.
The bill passed the House in June by a narrow margin, and would end up on the governor’s desk if the bill passes the senate without amendments.
Opponents of the bill say it is dangerous for low-income individuals. These individuals are more likely to utilize the short-term loans, and are more likely to become trapped in a cycle of borrowing and debt. They are also more likely to default on payments than middle- and upper-income individuals and families.
Nonetheless, supporters like Representative Chris Ross who testify on the bills behalf say short-term lending already does exist. He and others point to internet third-party groups that advertise.
"My guess is there would be strong agreement that it would be wonderful if none of our citizens were ever put in the myriad of life's challenges and emergencies that require obtaining a small-dollar, unsecured loan," State Banking Secretary Glenn Moyer said. "While this would be ideal, we also know it is not realistic in today's world."
Within the current agreement, the rules state that a borrower is allowed $1,000 or 25% of their monthly income. The loan is limit of 12.5% finance charge and $5 fee.
The law would prohibit borrowers to continue loans without repayment, also known as “rollover” loans.
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