Sunday, August 24, 2008

PayDay loans targeted by legislature

Robert S. Molaro
6245 S. Archer Avenue • Chicago, IL 60638
(773) 838-1212 • (708) 354-0743 FAX


STATE LEGISLATURE TO GO AFTER
PAY-DAY LENDERS
PRESS RELEASE 8-11-08
IMMEDIATE RELEASE

State Rep. Julie Hamos has held her first meeting at the State of Illinois Center in Chicago attempting to stop the high interest lenders from avoiding the Payday rules and regulations and making CILA (Consumer Installment Loan Act) loans at the same high interest rates they were making as Payday loans.

Currently, Illinois residents can borrow money from a number of sources referred to as sub-standard lenders. This would include what we refer to as "Payday Lenders" and CILA Lenders.

The Payday Lenders charge a statutory 403 percent interest for a two-week loan. However, they are regulated and required by the State of Illinois to have every loan approved from a database program which monitors and limits the individuals borrowing to a maximum of $1,000, as well as other numerous consumer safeguards.

Some of these Payday Lenders have been circumventing this database and interest rate cap provision by making CILA Loans which allows them to exclude themselves from the database while continuing to charge 300-400-500-600 percent (or more) interest rates and avoid other consumer safeguards.

The traditional CILA lender provides emergency cash loans to credit-challenged individuals.

These companies provide an important service to this under-served populace by lending cash to the Illinois residents without traditional access to credit, providing them a necessary alternative from traditional Payday loans with their high interest rates.

During the last General Assembly session, Rep. Robert Molaro proposed drawing a definite line between Payday and CILA lenders. He proposed distinguishing the CILA companies as "double-digit interest rate lenders" and a Payday operators as "triple-digit interest rate lenders." Rep. Molaro’s legislation acknowledges that triple-digit lenders must be strictly regulated, including participating in the $1,000 loan limit database, and be subject to other necessary consumer protection provisions.

Rep. Hamos will hold her next hearing on August 21, 2008 at the Bilandic Building, 160 N. LaSalle Room C-500, Chicago, Illinois at 1:00 p.m. in an effort to resolve all of the complicated issues needed to not only protect consumers, but also address the concerns of traditional CILA loan companies

"I am very supportive of Rep. Hamos’ efforts in addressing predatory lending in Illinois. We recognize that many people have failed credit and rely heavily on being able to borrow money without having any collateral. The major concern is to not be unfair to the hard working men and women of Illinois who do not have good credit and have a real need to borrow money at rates that are not ‘predatory,’" Molaro said.

4 comments:

Rocio said...

Payday Loans can help you if used correctly. They are meant to be short-term loans that are paid off on your next payday, and in the end payday loans would cost less than bounced check fees and late fees. Most importantly, payday loans are quick and easy.

John said...

Payday loans are a scourge on our families, our communities and our economy. Ohioans are defending a new pro-consumer bill in Ohio that caps loans at 28% APR, but are up against the big payday lobby. The payday lobby is spending millions to deceive voters via television ads and are also lying voters to get signatures for their issue. Check out this video: http://www.youtube.com/watch?v=zDoeXujagE4

We need to end predatory payday lending in Ohio! Vote Yes on Issue 5!

http://www.yesonissue5.org

Chris said...

Payday Loans are nt a scourge! They are a lifesaver! When I am short on money it’s nice to be able to walk in and have the money I need within just a few minutes to last me until payday. Just about everyone experiences money shortages with today’s economy and it is nice to know I can get the money I need to keep me on my feet.

John said...

Payday loans are a defective product! They are designed to trap borrowers in debt! No matter what the payday lobby tells voters, they are in our states for one thing: to keep charging 400% interest and make huge profits off the backs of working people.

We need to end predatory payday lending in our states. Vote yes on Ohio issue 5 for lower interest rates!

http://www.yesonissue5.org