MONTGOMERY вЂ” An Alabama House committee on Wednesday approved new restrictions on payday loans that short-term lenders can offer to consumers in need of quick cash.
MONTGOMERY вЂ” An Alabama House committee on Wednesday approved new restrictions on payday loans that short-term lenders can offer to consumers in need of quick cash. Republican Rep. Danny Garrett, R-Trussville, said the loans вЂњtrap borrowers in a debt cycleвЂќ as people renew the loan, or take out new ones when they can’t pay off the first. Garrett’s legislation would give borrowers more time to repay a loan, taking the window from 14 days to six months. He said that would reduce the effective annual interest rate from more than 456 percent to 36 percent.вЂњWe’re trying to get people who are in a debt trap, who are in a cycle of being not able to get out of debt, to not be sucked into this,вЂќ Garrett said. The committee approval ended a losing streak for reform advocates who for years have urged the state to crack down on the payday loan industry. Alabama Appleseed’s Legal Director Shay Farley said the longer timeframe would give borrowers a вЂњfighting chance to pay the loan.вЂќ Payday loans are short-term loans of up to $500. Borrowers pay a fee of up to $17.50 per $100 borrowed. вЂњThese are exactly the kind of reforms that are needed,вЂќ Farley said. вЂњI asked how many people among us who could repay $587 in 14 days. The answer is you can’t.вЂќ Payday lenders have argued that their stores provide a service to people who don’t have other means to access cash. Max Wood, a payday store owner and president of Borrow Smart Alabama, said the stores could not afford to stay open under the change and said it was attempt to вЂњeliminate the industry.вЂќ вЂњThey’ve tried to shut us down using different ideas and concepts,вЂќ Wood said. Garrett said people with poor credit need a way to access to loans. вЂњThere needs to be a fair way, a way that doesn’t exploit people and a way that doesn’t depend on usury,вЂќ Garrett said. The bill now goes before the 105-member House of Representatives. The legislation has a bipartisan coalition of more than 30 lawmakers signed on as co-sponsors, but still faces an uncertain outlook. Rep. Mike Hill, R-Columbiana, noted the possibility of federal regulations on the industry. вЂњI think we need to think about this longer and decide what is the right direction to go. I’m not saying we don’t need some reform,вЂќ Hill said. President Barack Obama put a spotlight on the payday loan industry in a visit to Birmingham in March. His visit came as the Consumer Financial Protection Bureau outlined a proposal to put new limits on the industry.
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Formerly a town, Simcoe is an important unincorporated community in Norfolk County located by Lake Erie with a population of around 13,000 residents. The community is one of the largest urban settlements in the County and it is the home of a Toyotetsu auto parts plant and an important ice cream production facility. Simcoe’s active workforce is comprised of around 6,000 people and more than 80% of its working population commutes to nearby communities to attend their jobs. The industries that provide most of the employment for Simcoe residents are manufacturing, retail, and health care. The average household income is approximately $70,000.
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