Wednesday, 11 March, 2009
Idaho lawmakers have agreed to consider two bills that would provide a powerful incentive to make sure all payday lenders offering loans to residents are licensed. Payday lenders provide short-term loans with high interest rates and usually cater to lower-income borrowers. Customers are supposed to repay the loan with their next paycheck. The loans can come at a high price, with most businesses charging about 25 percent interest.
Both bills introduced Tuesday, one in the House and one in the Senate, would invalidate any loan provided by an unlicensed payday lender. They would also allow the state Department of Finance to issue cease and desisted orders and to sue unlicensed payday lenders.
In order to operate in Idaho, payday lenders are required to have a lender's license. The problem is that some Internet payday companies are offering loans without getting a license. These bills would give the state the right to say that a loan from an unlicensed lender is invalid. House Minority Leader Rep. John Rusche, D-Lewiston, said the cease and desist order would keep lenders from harassing Idaho residents.
"Basically it says if you borrow from an unlicensed lender they have no right to collect," Rusche said.
The House bill would also require payday lenders to give consumers a list of credit and debt counseling services and would create an optional payment plan for borrowers who can't pay off the loan.
Source: forbes.com
