OLYMPIA – The payday lending industry will face tighter regulations in Washington beginning next year under a bill signed into law Friday by Gov. Chris Gregoire.
The new law, which takes effect Jan. 1, 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, and sets up a database to track the number of loans taken out by people.
Gregoire called the measure a “reasonable compromise” and stressed that borrowers will still need to be responsible about the amount of debt they take on.
The measure enacts an installment plan for people who fall behind on their loan payments. Customers would have as long as 90 days to pay back a loan of $400 or less, and 180 days for a loan of more than $400, without a fee. Currently, a borrower has 60 days and must pay fees.
The bill did not include an interest rate cap – an element long sought by consumer advocates – but supporters say the new law is an important first step.
Also Friday, Gregoire signed into law a measure that increases yearly car registration fees and approved the $3.3 billion construction budget.
Gregoire hopes the new $5 registration fee will help keep struggling state parks open.
Vehicle owners can opt out of paying the fee, which starts in September, and the measure requires the state Department of Licensing to ensure that the opt-out choice is prominently displayed and clearly visible on both paper and online renewals.
The construction budget dedicates money to schools, prisons, housing projects, water systems and more. It takes effect in July and runs through mid-2011.
Gregoire vetoed language restricting public art spending to artists living in Washington. She was worried it would spark retaliation against Washington artists working elsewhere.