Coalition Supports Bills Capping Payday Loan Rates for Hoosier Consumers
For Immediate Release
January 11, 2022
Contact: Natalie James, (317) 222-1221 ext.406, njames@prosperityindiana.org
Coalition Supports Bills Capping Payday Loan Rates for Hoosier Consumers
INDIANAPOLIS, IN – Hoosiers for Responsible Lending (HRL) applauds the introduction of two bills that would cap the annual percentage rate (APR) at 36 percent on payday loans in Indiana. The bills include SB 253 authored by Senator Ron Alting of District 22 and HB 1159 authored by Representative Carey Hamilton of District 87.
These bills have the potential to remedy the myriad of issues that Hoosiers across the state face with predatory lending. Across the nation, there have been calls for more equity and continuity in lending and access to credit. Recently, the U.S. House of Representatives introduced the bipartisan Veterans and Consumer Fair Credit Act which seeks to level the personal lending playing field for everyone.
“It is long past time for Indiana to join the growing list of states that protect their citizens from the predatory lending industry. Today, this industry targets Hoosiers who are struggling to get by, including low-income working families, veterans, and senior citizens. When desperate Hoosiers fall prey to this industry, they inevitably end up in a deeper financial hole. HB 1159 is my solution to protect vulnerable Hoosiers from these shameless profiteers," stated Representative Hamilton.
Senator Alting said that “Senate Bill 253 aims to help Hoosiers break the cycle of poverty and avoid getting into more debt than they can manage. I'm grateful to Hoosiers for Responsible Lending for its support of this legislation, and I hope to see Senate Bill 253 move smoothly through the legislative process.”
”Support for the Veterans and Consumers Fair Credit Act and similar state legislation will ensure that all military, whether under active or inactive duty (such as state national guard or army reserve troops) who are called upon as needed, will be equally protected. All consumers need this protection, but it can start with those who have served or are serving their country,” said HRL member Mark Tarpey.
Angela Espada, Executive Director of the Indiana Catholic Conference commented, “The bible is very clear, ‘Thou Shalt Not Steal.’ Predatory lending is tantamount to stealing. No citizens should be victimized, especially veterans who, along with their families, have sacrificed for this country. We owe a debt of gratitude to veterans and should do whatever we can to prevent them from having crushing debts that arise from predatory lending.”
Brigadier General James L. Bauerle (USA Retired), veteran and HRL member said, “Once a service member comes off of active duty, however, state interest rate caps are often the only rights they have that protect their financial well-being. States have had the power to enact caps since the time of the thirteen colonies. Currently 18 states and D.C.—representing about a third of the U.S. population—enforce interest rates of 36% or less that keep all high-cost loans out of their state.
Commanders and full-time staff in these Guard and Reserve Units have to get involved in dealing with these financial issues. This distracts from valuable training time and leadership which is already at a premium. Partners, parents, and others get pressured by these predatory lenders and they too impose upon the units for help—this is NOT the job of leaders in our military. That is why military and veterans service organizations have joined HRL.”
“As a non-profit working to keep families and individuals housed, access to fair lending is a very important piece of that. Predatory loans are particularly targeted to our low-income families, our senior citizens, our families of color, and our veterans, all of which deserve better. Many Indiana residents continue to struggle to pay for their housing and when an emergency arises, they often go to predatory lending as a quick fix. This only exacerbates the problem as families then struggle to keep their housing and pay off these expensive loans. There must be better alternatives and the passage of the Veterans’ and Consumers Fair Credit Act and/or State action to control interest rates can do this,” said Marie Morse, Executive Director, HomesteadCS.
Hoosiers for Responsible Lending was created by a network of advocates working to empower Hoosiers who have been affected by any form of predatory lending. HRL raises awareness of predatory practices across Indiana in order to hold lenders accountable and create attainable pathways to wealth building for all Hoosiers.
Payday lenders target veterans, older persons, rural consumers, and communities of color promising quick access to money in a pinch. But these loans often come with triple-digit rates that make it nearly impossible to pay back the loan. This leads to 60 percent of Hoosier borrowers taking out a new loan the same day as repaying the previous loan. High reborrowing rates at APRs as high as 391% in Indiana squeeze borrowers and drain fees from Hoosier families and communities, creating a “debt trap” that few are able to escape.
Indiana is just one of 25 states without strong rate caps that eliminate predatory lending and end the debt trap despite public polling that shows strong support for such reform. The Indiana Community Action Poverty Institute’s polling data shows that nearly nine-in-ten (88 percent) Hoosier voters support capping the maximum interest on payday loans to 36 percent APR as SB 253 and HB 1159. 87 percent say payday loans are a "financial burden," and 84 percent think they are "harmful." At 36% APR versus current law, borrowers could have saved $291 million over five years ending in 2018. A strong rate cap puts more money into local economies and communities that typically lack resources but allow payday lenders to thrive.
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About Hoosiers for Responsible Lending
Hoosiers for Responsible Lending was created by a network of advocates working to empower Hoosiers who have been affected by any form of predatory lending. HRL raises awareness of predatory practices across Indiana in order to hold lenders accountable and create attainable pathways to wealth building for all Hoosiers. The alliance includes veterans organizations, faith communities, consumer groups, and social service providers who recognize both the benefits of equitable, responsible lending and the damages of predatory lending.