Payday loan bill wins Senate Commerce OK
May 18, 2005
Assembly Majority Leader Barbara Buckley’s bill to eliminate what she described as the worst practices of payday and title loan businesses won a “do pass” recommendation from the Senate Commerce and Labor Committee Wednesday.
“The payday loan industry is rife with abuse,” she said afterward. “When someone borrows $200 and ends up having to pay $2,000, it’s got to stop.”
AB340, she said, still has an issue to work out with some of what she termed “the better companies” to make sure they can’t be hit with unjustified lawsuits by people who find an unintentional problem in a contract.
Senate Commerce Chairman Randolph Townsend, R-Reno, said during the hearing he expects to handle that issue as an amendment on the floor.
It will put some restrictions on the payday and title loan businesses for the first time in Nevada.
The bill requires loan companies to notify people who miss the deadline for paying off a loan by letter and let them enter into a repayment plan. Once the customer does that, according to lobbyist Alfredo Alonso, the maximum interest rate that can be charged is 10 percent over the prime lending rate.
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That is far below the 800 to 1,000 percent annual rate some of those companies charge.
Buckley said the biggest changes the legislation makes is to eliminate abusive additional fees and penalties many of those companies include in their loan contracts. One example given in testimony was a $1,200 fee on top of other money owed if a loan case ever went to court.
Alonso said his client, The Money Tree, supports the bill.
“Our hope is that we police the industry,” he said.
Jim Marchesi, who operates 14 Check City stores in Las Vegas, said they too have agreed to the legislation.
The bill goes to the Senate floor.