Payday Lending
HB258/SB75 - Deferred presentment transactions, term set at 30 days, Sec. 5-18A-13 amd.
Sponsor(s):
HB258 - Representatives Garrett, Coleman, Faulkner, Rafferty, Isbell, Dismukes, Reynolds, Daniels, Scott, Ball, Rogers, Shaver, Wood (D), Brown (K), Boyd, Stringer, Drummond, Hall, Nordgren, Sells, Mooney, Drake, Treadaway, Lee, Wadsworth, Whorton, Baker, Jackson, Warren, Fincher and Wingo
SB75 - Senator Orr
Synopsis and Analysis: Under existing law, the term of a deferred presentment transaction is between 10 and 31 calendar days.
This bill would require the term of a deferred presentment transaction to be a minimum of 30 calendar days.
Extending the time for repayment of a loan before a new fee is applied decreases the probability of default because one or more paychecks would likely be received by the borrower during the loan period. The bill would also decrease the probability of default because there is no additional fee for a minimum of 30 days, thus decreasing the effective APR if the loan must be extended.
According to the Alliance for Responsible Lending in Alabama (ARLA), the bill would:
"• Help more borrowers use these loans as marketed—short-term loans that can be paid back in one loan term, without ensnaring borrowers in debt for many months with additional interest;
• Ensure that borrowers are better positioned to make financial decisions that decrease default, decrease the need to borrow again to pay back initial loans, and decrease the money going to interest payments that are unproductive for Alabama’s families and communities; and
• Relieve the intense financial strain that comes with having to completely pay off a loan in only a few days—sometimes as few as 10 days under current law."
League Action and Justification: Support. The LWVAL supports extending the time for repayment of a payday loan before a new fee is applied. Disproportionately, lower income borrowers are relying on payday loans for a variety of reasons, including a lack of other, more traditional sources of financial assistance. Defaults on these loans often have dire consequences, different from traditional lending. As the debt amount rapidly multiplies, it can become impossible to repay. This bill is a small step toward alleviating that problem.
Bill Progress in Legislature
HB258
Go here to get more information about HB258 and changes in the bill as it progresses through the legislature.
HB258/SB75 - Deferred presentment transactions, term set at 30 days, Sec. 5-18A-13 amd.Sponsor(s):
HB258 - Representatives Garrett, Coleman, Faulkner, Rafferty, Isbell, Dismukes, Reynolds, Daniels, Scott, Ball, Rogers, Shaver, Wood (D), Brown (K), Boyd, Stringer, Drummond, Hall, Nordgren, Sells, Mooney, Drake, Treadaway, Lee, Wadsworth, Whorton, Baker, Jackson, Warren, Fincher and Wingo
SB75 - Senator Orr
Synopsis and Analysis: Under existing law, the term of a deferred presentment transaction is between 10 and 31 calendar days.
This bill would require the term of a deferred presentment transaction to be a minimum of 30 calendar days.
Extending the time for repayment of a loan before a new fee is applied decreases the probability of default because one or more paychecks would likely be received by the borrower during the loan period. The bill would also decrease the probability of default because there is no additional fee for a minimum of 30 days, thus decreasing the effective APR if the loan must be extended.
According to the Alliance for Responsible Lending in Alabama (ARLA), the bill would:
"• Help more borrowers use these loans as marketed—short-term loans that can be paid back in one loan term, without ensnaring borrowers in debt for many months with additional interest;
• Ensure that borrowers are better positioned to make financial decisions that decrease default, decrease the need to borrow again to pay back initial loans, and decrease the money going to interest payments that are unproductive for Alabama’s families and communities; and
• Relieve the intense financial strain that comes with having to completely pay off a loan in only a few days—sometimes as few as 10 days under current law."
League Action and Justification: Support. The LWVAL supports extending the time for repayment of a payday loan before a new fee is applied. Disproportionately, lower income borrowers are relying on payday loans for a variety of reasons, including a lack of other, more traditional sources of financial assistance. Defaults on these loans often have dire consequences, different from traditional lending. As the debt amount rapidly multiplies, it can become impossible to repay. This bill is a small step toward alleviating that problem.
Bill Progress in Legislature
HB258
Go here to get more information about HB258 and changes in the bill as it progresses through the legislature.
| Calendar Date | Body | Amd/Sub | Matter | Committee | Nay | Yea | Abstain | Vote |
| 03/21/2019 | H | Read for the first time and referred to the House of Representatives committee on Financial Services | FS | | | | |
SB75
Go here to get more information about SB75 and changes in the bill as it progresses through the legislature.
| Calendar Date | Body | Amd/Sub | Matter | Committee | Nay | Yea | Abstain | Vote |
| 03/05/2019 | S | Read for the first time and referred to the Senate committee on Banking and Insurance | B&I | | | | |
Contact information for legislators and committees that might be referenced in this bill:
Representatives Representatives Phone Directory Standing House Committees
Senators Senators Phone Directory Standing Senate Committees
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