Alabama Senate Passes “30 Days to Pay” Reforms
The Alabama Senate today passed Senate Bill 138 with bipartisan support on a vote of 20-4. The legislation gives borrowers 30 days to pay any payday loan, which helps borrowers better manage their finances by allowing them to pay off debts alongside other monthly bills. Under current law, payday lenders can set the terms of their loans from 10 to 31 days, and can charge a fee of up to 17.5 percent of the amount borrowed. A payday loan due in 14 days carries an egregious annualized interest rate of 456%.
This simple reform to Alabama’s payday loan industry, which would effectively cut the current annual interest rate in half, now moves to the Alabama House.
“This simple reform enjoys bipartisan, overwhelming, statewide support,” said Dana Sweeney with the Alabama Appleseed Center for Law & Justice. “We are grateful for the responsive leadership that carried this bill through the Senate. Now, we look toward the House seeking the same level of commitment to the well-being of Alabama’s borrowers. Predatory lending reform is a priority for many Alabama voters who are tired of seeing this can kicked down the road year after year, and this bill is an opportunity for legislators to finally deliver on the change that their constituents have requested for so long.”
“Single mothers, senior citizens, students and people with low and fixed incomes will be helped by passing this meaningful payday lending reform,” said Rev. Carolyn Foster, Faith in Community Coordinator for Greater Birmingham Ministries & Deacon at St. Mark’s Episcopal Church. “Usury is forbidden in the Bible because it takes advantage of the weak, the poor and the vulnerable. It is exploitation.”
“Payday lending is marketed as a helping hand but it’s really a harmful trap,” said Jared Freeman, CEO of the ASE Credit Union. “At ASE, we see first-hand how payday lending is destroying the financial security of Alabamians. Furthermore, until our Federal and State government take a stand against predatory lenders, many Alabamians will continue to be stuck in the trap that is payday lending.”
“SB 138 is good for Alabama families and good for Alabama communities,” said Mary Lynn Bates of the Zonta Club of Birmingham. “When families can keep more of their paychecks, they are better able to meet the costs of daily living and contribute to their local economy. Alabama communities will be stronger with millions of dollars in hard-earned wages going to local stores instead of out-of- state lenders.”