Posted on30 April 2010.
This article pretty much explains it:
A bill limiting the terms of payday loans has narrowly passed a vote in the state Senate.
The Senate backed a new version of the bill late Thursday by one vote. It changes short-term payday loans into six-month loans.
Lenders would still be able to charge a $75 origination fee as well as monthly fees up to $30 and up to 45 percent in interest.
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What is this type of product? Is it a revolving line of credit?
Will these six-month loans be able to be issued without a credit check, like payday loans? My guess is there will be many people who would qualify for a payday loan, or an installment payday loan, who will not qualify for a six-month loan. What are those people going to do when they have an emergency need for cash?
This is why we need Federal legislation (or a Federal court decision) to invalidate state usury laws so there can simply be a free market in loans – with, of course, strong regulation to ensure that consumers are not duped into transactions that they don’t understand. A free market would provide consumers with many loan choices and not just a few concocted by activists and politicians.