British Columbia bill caps interest rates
Starting this fall, interest rates that can be charged on payday loans in British Columbia will be capped at 23 percent.
Unlike most legislation in the United States, the British Columbia law doesn’t cap the annual interest rate; it caps the interest that can be charged each time the borrower defaults on the loan.
Encouraging responsibility
The legislation in British Columbia means that when a person takes out a payday loan, all of the fees and interest assessed at the time of the loan can only add up to 23 percent.
If the borrower pays back the loan at the agreed upon time, usually within two weeks of the loan date, that is all the customer pays. Only if borrowers fail to pay back the loan will they face more interest charges.
Encouraging education
Another provision in the British Columbia bill states that loan terms must be clearly displayed for customers who enter a payday loan store. According to Globe British Columbia:
The full cost of borrowing will be posted for consumers to see when they walk into a payday-loan storefront in B.C. starting in November. It will be displayed on the desk where they sign a contract, and it will be disclosed in the contract itself.
Arizona defeats payday loan reform bill
Once again, a bill to cap payday loan interest rates in Arizona has been defeated. House Bill 2608 would have capped interest rates so that the maximum interest rate on loans that were delinquent for a year would be capped at about 133 percent.
The people have spoken
Arizona voters had an opportunity to vote on payday loan interest rate caps last fall. The bill presented to voters would have lowered interest rates, but not to the point the legislature had attempted. The bill was defeated by 60 percent of the vote.
This doesn’t seem to be that bad – the rates are only capped on defaults. I’m not really a huge advocate of government telling us what to do, or the establishment of a nanny state – that way lies tyranny – but this doesn’t seem to be too bad…as long as restrictions on business stay moderate.
Politicians, one would think that most are cut from the same cloth but it would appear from this article that they don’t all come to the same conclusions.