Michigan League for Public Policy
Final October, we penned a line within the Alpena Information on payday financing, the danger it poses to residents that are local and also the legislative efforts underway in Lansing to guard borrowers.
We noted that rural areas, in specific, are at risk of lending that is payday and that Alpena County has one of many greater prices of payday loan providers when you look at the state, with 14 shops per 100,000 individuals, making the high-interest, high-risk loans much more available here than generally in most counties. We additionally remarked that a study by the Center for Responsible Lending unearthed that, from 2012 to 2016, payday loan providers took a lot more than $513 million in charges from customers in Michigan, with charges and interest that will achieve over 340% annual percentage rate (APR).
But we additionally shared some news that is good visitors, as home Bill 4251 have been introduced when you look at the Michigan Legislature to require loan providers to find out that a debtor has the capacity to repay and that the borrowerвЂ™s debt-to-income ratio is certainly not higher than 41%. Banking institutions and credit unions have to figure out that borrowers are able to repay their loan, but payday loan providers don’t have any such requirement. That bill additionally included a stipulation that borrowers might have a maximum of one loan that is active once and should have a 30-day вЂњcooling offвЂќ duration between loans вЂ¦ however it did not range from the 36% rate of interest cap that the initial bill language included.