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Payday Loan Limit Could Go Up

A proposal to raise the cap on risky payday loans in California is making its way through the state Assembly.

Payday loans allow people to borrow against future paychecks in exchange for immediate money. But the loans carry such high interest fees - up to 460 percent annually -- that borrowers get trapped in a cycle of debt. Some people even borrow on their unemployment checks. It is against this backdrop that Assemblyman Charles Calderon has proposed raising the cap from $300 to $500. Tom White is the Whittier Democrat's chief of staff. He says the limit hasn't gone up since the inception of payday lenders in 1996.

"People don't have access to money often any other way than a product like this," White said. "They either can't qualify for a credit card or banks don't lend this amount of money generally."

But consumer advocates say there are alternatives for people in need of quick cash.

Pawn shops and other lenders offer loans with longer terms and lower interest rates. Jean Anne Fox of Consumer Federation of America says Calderon's bill to increase the lending limit for payday loans is irresponsible.

"It would be much more difficult to repay a $500 loan," Fox said. "The larger the loan amount, the more people are going to get caught in repeat borrowing to keep the check from bouncing that they left with the payday lender to secure the loan. So this is an anti-consumer piece of legislation."

Consumer groups say 44 percent of payday borrowers default in the first two years.

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Avatar for user 'honeybrink'

honeybrink | May 18, 2011 at 1:30 a.m. ― 5 years, 10 months ago

Speaking of payday loan, Wisconsin State was the last state to have not regulated the payday lending industry. Last year, this changed. Auto title lending was only banned when the governor line-item-vetoed a bill intended to regulate the industry. One committee in Wisconsin State is now doing its best to get title lending put back on the ballot. The Wisconsin legislature will consider the question very soon. Here is the proof: Wisconsin Republicans attempting to re-legalize auto title loans,

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Avatar for user 'royg6852'

royg6852 | May 19, 2011 at 1:46 p.m. ― 5 years, 10 months ago

I know what the pros and cons are, but if you're serious about paying the loan back all you need is a good place to get one like we borrowed $500 from them and they give you longer to pay back then a normal cash loan place.

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Avatar for user 'emorgan'

emorgan | October 19, 2011 at 2:09 a.m. ― 5 years, 5 months ago

I've used this kind of service twice, both emergency situations. The fee to get the cash advance was less than what it would have cost me to let the situation ride until my paycheck came in. The smarter solution, which I am working on, is to create a savings account I can use as my own emergency "payday advance." When I pay it back, I'll be paying myself, rather than another predatory lender. Usury is not only against the law, it's against the moral teachings of every major world religion. I don't understand how those business owners sleep at night.

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Avatar for user 'bipsa'

bipsa | December 7, 2011 at 12:30 a.m. ― 5 years, 3 months ago

That would definitely ease people in emergency time, i would like to thank the providers of payday online Guaranteed Payday Loans, keep up the good work.

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