The harms of payday lending have now been well documented, and also the Michigan Legislature happens to be poised to produce those loan providers with another device which could cause harmful monetary effects to your stateвЂ™s currently vulnerable communities.
May 27, the Michigan home of Representatives approved House Bill 5097, authorizing a brand new long term, high cost вЂњsmallвЂќ loan product by вЂњdeferred presentment solution deal providers,вЂќ better referred to as payday loan providers. The proposed legislation allows payday loan providers to make loans all the way to $2,500, with monthly charges of 11 per cent regarding the principal for the loan, comparable to an APR of around 132 per cent.
Which means that for a one-year, $2,500 loan, a debtor would find yourself paying back significantly more than $4,000. Simply speaking, HB 5097 will allow payday loan providers to offer another high-cost loan item, with bigger quantities and longer terms.