Nearly 100 Arise supporters gathered Thursday in Montgomery to urge reforms of payday and auto title lending in Alabama. Sen. Arthur Orr, R-Decatur, and Rep. Rod Scott, D-Fairfield, spoke at an Arise news conference to encourage advocates to push for their respective reform bills.
“There is no one in this state who does not have a friend or know someone with a friend who has been affected by these products,” Scott said of title loans. “They should not be allowed at these rates.”
Scott’s HB 406 would cap annual interest rates on title loans at 36 percent APR, down from the current 300 percent APR. Orr’s SB 410 would give borrowers more time to repay payday loans, which now carry annual interest rates of 456 percent APR, by extending loan terms to four months. (Most payday loans in Alabama are now two-week loans in practice.)
Orr’s bill also would create a statewide common database of payday loans. That would make it easier to enforce a current state law that prohibits borrowers from taking out more than $500 in payday loans at any one time. The state Banking Department last year proposed regulations to create a common database, but lenders sued to block the plan, claiming the department lacked the authority to do so.
SB 410 won committee approval Wednesday and could reach the Senate floor next week. Orr said changes to Alabama’s payday lending law have a real chance to be enacted this year. “In politics, many times it’s an incremental gain,” Orr said. “This year is really looking like a year when you will have made progress.”
Arise state coordinator Kimble Forrister thanked Orr and Scott for pushing their bills and said efforts to reform payday and title lending are gaining momentum statewide. Forrister pointed to the growing number of Alabama cities that have imposed moratoriums on new business licenses for such lenders, including Jasper just this week. He also noted the large number of lawmakers who are co-sponsoring SB 410 and HB 406. Nearly half of the Senate co-sponsors Orr’s bill, and more than half of the House co-sponsors Scott’s bill.
Scott urged advocates to remain steadfast. “We have to stay encouraged, but we also have to expand,” he said. “Where we are now is because of everyone’s effort. … No matter what happens, we’re not going to give up the effort to change these rates.”
Lawmakers will return Tuesday for the 23rd of 30 allowable meeting days during the 2014 regular session, which is expected to last until early April.
By Chris Sanders, communications director. Posted March 7, 2014.