Proposal to Allow 192% Interest on PayDay Loans FEBRUARY 26TH, 2019 MEGAN DIVENTI INDIANA The Indiana Senate is voting on a measure that would allow Payday lenders to charge interest rates on small loans at very high levels. Senate Bill 613 is causing controversy over whether a 192% interest rate on certain Payday loans would be allowed. As of now, to be considered a “loan shark” a company has to charge 72% interest or higher. If a company is caught charging anything higher than that it’s considered a felony crime, but a bill that just passed in the Indiana Senate could change all that. “If you are going to do something like this, like a payday loan, you take all the measures and be really cautious about this,” says Oana Schneider, Tri-State Better Business Bureau. You’ve probably seen ads for Payday loans or fast money. For many it’s a short-term solution for having a bit more cash until their next payday, but these loans come at a higher cost. “Sometimes people don’t realize that this is going to open the door to what we call a debt cycle,” says Schneider. “You will get a loan and you will not be able to pay it on time and the interest rate is going to be really high and that means you will keep postponing this and getting more loans to pay off the first loan and then get another one to pay off the second loan that helps you pay the first loan.” Approximately 12 million Americans use Payday loans each year. Now Hoosiers who are living paycheck to paycheck could be hit harder as lawmakers discuss Senate Bill 613. The bill would allow two new types of loans. This includes loans between $605 and $1500 for six to 12 months with annual percentage rates as high as 192%. The other type is an installment loan of up to $4,000 with repayment periods up to four years out and interest rates of 99%. Under those terms, as soon as you borrow $100, you already owe an additional 99 in interest. “So when you don’t have the money and you go to one of these places its very important to know the interest rate is going to be high because they know that you are in a critical condition and they will try to take advantage of that,” says Schneider. Senate Bill 613 now heads to the House. Experts say limiting the amount you borrow and keeping documentation is critical if you are seeking a Payday lender. In Kentucky, Illinois, and Indiana, Payday loans are heavily regulated but legal. Just this month, the Consumer Financial Protection Bureau reached a settlement with Indiana and Kentucky over Payday lender Cash Tyme. The company was found guilty of violating the Consumer Protection Act of 2010 by not disclosing details of their loans.

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FEBRUARY 26TH, 2019 MEGAN DIVENTI INDIANA

The Indiana Senate is voting on a measure that would allow Payday lenders to charge interest rates on small loans at very high levels.

Senate Bill 613 is causing controversy over whether a 192% interest rate on certain Payday loans would be allowed. As of now, to be considered a “loan shark” a company has to charge 72% interest or higher.

If a company is caught charging anything higher than that it’s considered a felony crime, but a bill that just passed in the Indiana Senate could change all that.

“If you are going to do something like this, like a payday loan, you take all the measures and be really cautious about this,” says Oana Schneider, Tri-State Better Business Bureau.

You’ve probably seen ads for Payday loans or fast money. For many, it’s a short-term solution for having a bit more cash until their next payday, but these loans come at a higher cost.

“Sometimes people don’t realize that this is going to open the door to what we call a debt cycle,” says Schneider. “You will get a loan and you will not be able to pay it on time and the interest rate is going to be really high and that means you will keep postponing this and getting more loans to pay off the first loan and then get another one to pay off the second loan that helps you pay the first loan.”

Approximately 12 million Americans use Payday loans each year. Now Hoosiers who are living paycheck to paycheck could be hit harder as lawmakers discuss Senate Bill 613.

The bill would allow two new types of loans.

This includes loans between $605 and $1500 for six to 12 months with annual percentage rates as high as 192%.

The other type is an installment loan of up to $4,000 with repayment periods up to four years out and interest rates of 99%. Under those terms, as soon as you borrow $100, you already owe an additional 99 in interest.

“So when you don’t have the money and you go to one of these places its very important to know the interest rate is going to be high because they know that you are in a critical condition and they will try to take advantage of that,” says Schneider.

Senate Bill 613 now heads to the House. Experts say limiting the amount you borrow and keeping documentation is critical if you are seeking a Payday Lender.

In Kentucky, Illinois, and Indiana, Payday loans are heavily regulated but legal.

Just this month, the Consumer Financial Protection Bureau reached a settlement with Indiana and Kentucky over Payday lender Cash Tyme. The company was found guilty of violating the Consumer Protection Act of 2010 by not disclosing details of their loans.

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