Tuesday, January 05, 2010

New payday loan laws in Washington state

New laws in Washington state have been put in place to limit the amount of money people can borrow from payday loan companies.

The payday loans are very short term, very high interest loans that can be borrowed against your next pay check. The borrower often writes a post dated check to the lender that they cash on the date of the borrowers next paycheck.

Some people get caught in a trap of going to these lenders repeatedly, or borrow such a large amount that their next paycheck cannot cover the high interest. So the news laws hope to ease these problems.

From The Olympian, Associated Press writer Manuel Valdes interviews a payday loan business owner.

The new law limits the size of a payday loan to 30 percent of a person's monthly income, or $700, whichever is less. It also bars people from having multiple loans from different lenders, limits the number of loans a person can take out to eight per 12 months, and sets up a database to track the number of loans taken out by people.

"I think it's going to affect (them) pretty dramatically," said (Ken) Weaver, whose Apple Valley Check Cashing stores are in Moses Lake and Wenatchee. "We don't know if we're gonna be open in six months."

The limit on how many loans people will be able to take out is what will cut into his stores' revenue, Weaver said, echoing one of the arguments from the payday industry on how the new law will cut into its business model.

But for consumer advocates who lobbied for the new law, the regulations being put in place are a step toward protecting people from falling into debt. For years, they have argued that payday lending leaves people paying off loans for a long time, often using other payday loans, and paying heavy interest.

1 comment:

Payday Loans said...

I didn't see the new payday loan regulations on your website, so I'm posting them here:

Payday loan limit will be capped at $700.00 or 30% of gross monthly income, whatever is less.

A statewide databases will be established so that payday lenders can track their borrower's loans.

If a person can’t repay on time, they can ask the lender for an installment plan, which the lender must provide free.

Lenders may not harass people who can’t pay

A person will only be able to take out 8 payday loans in a year.