Mississippi Gov. Haley Barbour signs payday loan legislation
The Associated Press reports that Mississippi Gov. Haley Barbour has signed into law a bill that saves payday lending in the state for at least three more years. The new law will also change certain regulations by which payday loan companies must operate. The new Mississippi payday loan law will go into effect Jan. 1, 2012.
Extending payday lending, maintaining Mississippi jobs
Payday lending law on the books before Gov. Haley Barbour signed the extension would have expired at the beginning of 2012. A 36 percent APR would have been imposed, which would have shut down all but the most diversified payday loan outlets. Approximately 3,000 Mississippi jobs would have been lost as a result of payday loan business closures.
Only through a thorough review of the effects that expulsion of payday lenders would have had on Mississippi were regulators able to decide upon the bill to send to Barbour. While some origination fees have been reduced, payday loans will remain a choice for consumers
“This time, it was the will of the Legislature that the consumers get reduced fees,” said Sen. Walter Michel (R-Jackson). “The bill that was passed will enable about 3,000 jobs to remain intact.”
What a Mississippi payday loan will cost consumers
Payday loan customers were accustomed to paying $21.95 per $100 borrowed, with a 14-day term. Under the new legislation, fees are capped at $20 per $100 borrowed for loans up to $250. For amounts from $251 to $500, the $21.95 fee remains. However, the term has been increased considerably, to 30 days. This effectively reduces the APR by half, which satisfies federal regulators, even though payday loan fees cannot be logically measured in terms of APR.
In addition to the rate changes, the Mississippi payday loan law will mandate that a hotline be in place for consumers to reach the state attorney general in the event that abuses occur.
It’s all out in the open
Dan Robinson of the Financial Services Centers of Mississippi doesn’t understand why critics imply that payday loans are so deceptive.
“There’s no fine print. No hidden charges. No documentation fees,” he said. “It’s a very transparent transaction. We don’t collect our money until people pay the check.”