Seattle, WA – If Christmas bills are piling up, there's reason to think twice before getting a payday loan to cover them. Washington’s new payday lending laws take effect this Friday (January 1). They limit the number and dollar amount of loans a person can take, and require lenders to help borrowers stick to those limits. Comments from Deb Bortner, director of consumer services, Washington State Dept. of Financial Institutions.
Intro: Washington’s new state laws to curb payday loan abuse are equally tough on short-term borrowers and their high-interest lenders. Starting January first, no one can take out a payday loan that totals more than 700 dollars, or one-third of their gross monthly income…and lenders can check the borrowers' loan history on a statewide database. The maximum number of payday loans that can be legally issued per person in a 12-month period is eight. Deb Bortner with the state Department of Financial Institutions says the goal is to keep people from getting stuck in an expensive cycle of debt.
|Cut 175098 :13 "What we’ve seen is, y’know, there are people who, a very small number of people, that actually take out one a week. And the law really says that you’re not supposed to be able to take out one loan to pay the last loan."|
Suggested Tag: Bortner says the lenders don’t like the new law, because they make more money by rolling over one loan into another. However, with more than on billion dollars in short-term loans made per year across the state, she says lawmakers decided both lenders and borrowers needed some limits. D-F-I is the agency that licenses payday lenders.
Alternate Cut: Other states have passed caps on payday loan interest rates, but Deb Bortner, with the state agency that regulates these lenders, says Washington lawmakers are taking a different approach. They’re limiting the amounts that people can borrow…and making lenders work with those who can’t keep up with payments.
|Cut 185098 :15 "When people do get in trouble and they can’t pay it back, they can tell their lender, on or before it’s due that, ‘I can’t pay it back on time,’ and they’re then eligible to get a free installment plan."|
Alternate Tag: She says the installment plan gives the borrower 90 days to pay back a loan of 400 dollars or less…and 180 days for larger amounts. The new law also sets out specific rules for when and how often a lender can contact a borrower who is behind on payments.