Mississippi votes for two and a half more years of payday loans
Payday lending in Mississippi has been extended for two and a half years thanks to House Bill 455, reports The Clarion-Ledger. In a compromise with opponents, the new law lowers the maximum allowable APR to 572 percent, but that still doesn’t sit well with religious and consumer advocates who railed against the bill. Payday lending opponent Rep. John Mayo called payday loans “the new slavery” and lenders “no better than plantation commissaries,” a comparison black colleagues like Rep. Omeria Scott found offensive.
Mississippi payday loans continue to serve consumer need
While critics of Mississippi House Bill 455 believe the only acceptable outcome short of banning payday loans entirely would have been a 36 percent APR (which numerous studies have shown to be untenable). Supporters of the bill are happy that such a low rate cap was not the ultimate result, as consumers with emergency financial needs look to such small loans to avoid trouble.
Additional provisions of House Bill 455 include a cap of $20 per $100 loaned up to $250 and a cap of $21.95 per $100 in payday loan cash received above $250. The lending cap rises from $400 to $500. Consumers who take out larger payday loans are given 28 to 30 days to repay. The fee structure matches Mississippi law for all types of small loans. The requirement that payday lenders provide printed materials that spell out the payday lending law and a contact number for the Mississippi Department of Banking and Consumer Finance in case of problems is in keeping with related federal payday loan laws.
Maintaining a consumer’s right to choose
Mississippi House Banking and Financial Services Committee Chairman George Flaggs recognized that while the new legislation spelled out in House Bill 455 isn’t perfect, it is better than the previous law that bore higher interest rates. The two-tiered fee system was hailed by payday loan advocacy group Borrow Smart Mississippi as groundbreaking, in that it both protects consumers and maintains their right to choose.
If the Mississippi Senate passes House Bill 455 and Gov. Haley Barbour signs it into law, it would go into effect Jan. 1, 2012 and expire July 1, 2015.