Without a usury law in Utah, some payday lenders have charged upwards of 1,000 percent annual percentage rate (APR) on a loan. Borrowers can take out multiple loans from multiple lenders, getting trapped into a cycle of debt.
But HB127, introduced by Rep. Jim Dunnigan and passed unanimously in committee last week, will help level the playing field ("Payday loan bill flies through panel," Tribune, Feb. 14).
Enhanced reporting requirements for payday lenders will give the state a better picture of the dollar amounts of loans paid and unpaid after the maximum total loan period of ten weeks. Borrowers may request interest-free repayment plans to pay any balances due after ten weeks. Attempts to determine a borrower’s ability to pay will be required, but only at the time of the initial loan.
Payday lenders will no longer be able to require that borrowers to travel long distances to settle court disputes about the loans. These revisions to Utah’s current law will help regulators better understand the scope of payday lending in the state, and perhaps help reduce the number of people who cannot get out from under these costly loans.
AARP Area Coordinator
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