House passes bill to cap payday loans at 36 percent

[cashlenders]

CONCORD – The House put the final nail in the coffin of the payday lending industry, approving a Senate version of a bill yesterday that effectively closes their doors on Jan. 1, 2009.


The bill sets a 36 percent cap on annualized interest rates, and restricts the number of times a borrower can take a loan from a payday loan shop.
Gov. John Lynch said through his spokesman he will sign the bill.


Payday lenders, who loan money for two weeks at a time based on a borrower's next paycheck, have said they cannot stay in business under the interest rate cap in the bill. Some lenders take a car title as collateral for a 30-day loan. Many times borrowers roll the loan into a new loan when payment is due, starting a cycle of growing debt.


Another bill the Legislature had already passed set up a study commission that will report by Nov. 14 on alternative lending programs for low-income borrowers.


Language in the bill that passed today, HB 267, describes the interest rates lenders charge as "unreasonable and predatory," noting they run up to and sometimes beyond 500 percent a year.


The industry predicted hard times for borrowers who need quick access to cash and may have spotty credit histories.


Advance America, with 24 stores and 50 employees in New Hampshire, said the bill will leave working families without a viable option and hundreds of people will lose their jobs at lenders' offices.


"The passage of this legislation is certain to create serious and unfortunate consequences for many hardworking people," company spokesman Jamie Fulmer said.


The industry had fought regulation for the past few years, but several lawmakers launched a concerted effort this year. New Hampshire Legal Assistance took an active role in pushing for limits on the lenders.