Alabama legislators are trying to cut down on the high interest rates payday loan companies are charging their customers. Many of these companies are known to charge up to 500% APR on their loans.
The legislators have already put forward the necessary paperwork. They wish to increase the minimum payback period to 30 days, up from 14 days, so that the annual interest rates on the loans will be reduced by half. They wish to protect vulnerable people rather than inhibit the industry completely.
Advertisements for payday loans can be seen in many shop windows in Montgomery, often enlisting Print shops for flyer printing services in order to make use of affordable advertising. Though one of the easiest types of loans to obtain, they often carry some of the highest interest rates, and some legislators feel that this is causing many people to be caught in a cycle of debt.
About 21% of the borrowers roll their loans over 12 times every year. These are the people who will benefit the most from extending the minimum repayment period to 30 days. Legislators such as Rep. Garret told the press that mayors are worried about how the current payday loan system is inhibiting economic growth.
A previous attempt to pass such a bill failed to make it out of the House, but its supporters have not given up on pushing for payday loan reforms.
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