The Indiana House approved legislation Wednesday to create a new type of payday loan – with interest rates of up to 200 percent – that opponents argue amounts to predatory lending.
The legislation creates a loan of between about $600 and $1,500, with a term of up to 12 months. Rep. Woody Burton (R-Whiteland) says the loans are aimed at those with poor credit who have nowhere else to turn.
“We’re trying to develop something that will help them start establishing a line of credit and a credit report where they can move up and get a better type of loan,” Burton says.
The bill also allows an interest rate of up to 200 percent. And it’s opposed by dozens of groups, including all of the state’s major veterans organizations – as Rep. Carey Hamilton (D-Indianapolis) says, those who work with people who would be affected by the measure.
“We’ve heard from industry that there is demand for this product,” Hamilton says. “Of course there’s demand for easy cash, right? That doesn’t mean it’s good.”
The House narrowly passed the bill 53-41.