State lawmakers are sending a warning to payday lenders in Delaware by capping the amount of interest companies can charge in a year.
The bipartisan bill from Rep. Helene Keeley (D-Wilmington South) would limit that annual percentage rate to 100 percent of the amount borrowed.
It also prevents lenders from collecting delinquent payments automatically through the borrower’s bank account. Regular payments that are declined can’t be debited again for at least five business days without consent.
The new bill wasn’t taken up on the final day of the General Assembly, but Keeley says something needs to be done to reign in companies that sidestep current regulations.
“We’re not trying to put them out of business, we’re just trying to cap the amount of a rate they can charge a person for taking out that short-term loan," said Keeley. "The problem is if someone takes out a short-term loan and it turns into a five, six, seven, eight year loan and the person can never get out from under [it].”
Rep. Mike Ramone (R-Middle Run Valley) is also one of the bill’s main sponsors. He says the entire lending industry isn’t to blame, but some are specifically targeting the most vulnerable.
“There also is a point at which people are absolutely desperate and they’ll do whatever they can to obtain money, and unfortunately, some of these predatory lenders are taking advantage of that and making it a devastating environment for these people," said Ramone.
In 2013, lawmakers limited the amount of payday loans lenders could give out to a single person to five in one year.
Any new legislation would have to surface when the General Assembly reconvenes for a new session in January.
