The Senate has voted 21-13 in favor of SB 1314, controversial payday lending legislation from Sen. Lee Heider, R-Twin Falls, that was opposed by advocates of reform in payday lending for not going far enough, and backed by major payday lending firms. The bill would allow people who can’t repay their payday loans a once-a-year option to get an extended payment plan with no additional fees or interest, and would ban payday loans for more than 25 percent of the borrower’s monthly income, with the burden on the borrower to prove that. It doesn’t, however, place any limits on interest rates or otherwise cap loan sizes.
“It’s not a comprehensive solution, I don’t see it as one,” said Sen. Jim Rice, R-Caldwell. “It’s also not going to stop people from doing dumb things by borrowing money they can’t repay, but there’s no law that stops people from borrowing money they can’t repay. ... It is a behavior that ultimately does tend to lead to bankruptcy. So a cap on interest rates is not going to help. This should marginally help at least those that desire to fix their situation and actually repay the loans.”
Sen. Todd Lakey, R-Nampa, opposed the bill, saying, “I’m really concerned when government attempts to protect people from themselves.” He said he viewed the measure as “government inserting themselves between two lawfully contracting parties.” Sen. John Tippets, R-Montpelier, said he thought the bill was “a reasonable first step.” It now moves to a House committee.
Heider said the average payday loan in Idaho is outstanding for 18 days, and the average charge for a $100 payday loan is $20. “This does provide an out for those people that get stuck in this lending cycle and really need to get out from under it,” he said.