New Hampshire Gov. John Lynch vetoed a bill Wednesday that would raise the ceiling title loan lenders can charge. The bill would have allowed up to 25 percent interest charged monthly. The state joins 31 others in disallowing these kinds of loans.
Short term loans secured by vehicle titles
Title loans are short term loans secured by vehicle titles. The current rate allowable, adopted by the state in 2008, is 36 percent annually. That is the same cap allowed nationally on loans made to members of the military and their families. That federal bill was passed by Congress in 2006 and signed into law by President George W. Bush.
State Bill 57
New Hampshire State Bill 57 would have allowed lenders to charge up to 300 percent annually. It also would have increased the percentage of the principal a borrower would have paid to renew the loan from 5 percent to 10.
Bill had many detractors
Lynch supported the veto by saying the bill was opposed by many legislators in both parties, as well as the Local Welfare Administrator’s Association, AARP, the Banking Department, the Department of Justice, the New Hampshire Community Loan Fund and New Hampshire Legal Assistance.
Governor says it would hurt families
The bill, Lynch said in a press release, would be detrimental to families, the community and to the economy. The current 36 percent cap, he said, is “reasonable and well thought out. There is no evidence that reversing that law would benefit New Hampshire. On the contrary, there is significant evidence that it would harm our state and families.”
A cycle of debt for vulnerable families
“Failure to repay a loan could lead to seizure of the family car,” Lynch explained, “Which is often essential for family members to maintain employment. “Furthermore,” he said, “for vulnerable families, these excessive interest charges could force them further into a cycle of debt and potentially onto public assistance.”