A bill to tighten restrictions on payday loans has bipartisan support and it remains to be seen whether that will be enough to overcome an intense lobbying effort by the industry to stop the measure.
- Colin Bonini
Two of the co-sponsors, Sen. Colin Bonini, R-Dover and Rep. Gerald Hocker, R-Ocean View, are two of the most conservative members of the General Assembly.
The bill calls for the loan shops to limit the loans to no more than five to an individual over a one-year period. It also limits rollovers to more than four existing loans.
Interest rates on the short-term loans can run into hundreds of percentage points and the pain increases when the borrower cannot pay off the orignal loan and is forced “ roll over” or extend the term of the loan.
The industry continues to claim that their service fills a need, with most loans eventually paid off. Supporters also see the services as an alternative to “loan sharks” that use violence to collect and extend payment times on loans.
Delaware, with its banking-friendly climate, has chosen to allow the loans, with some fees used for financial education. Loan offices operate throughout the state and have helped fill space in shopping centers, particularly in lower income areas. – Doug Rainey
