Minnesota lawmakers plan to introduce legislation next year to curb payday lending after a previous proposal failed that would have limited the number of loans consumers can take out to four, CollectionsCreditRisk.com reported yesterday. A specific proposal has yet to be designed, but other states’ reforms are expected to provide guidance as lawmakers seek to strike a balance that protects consumers and avoids putting lenders out of business. Payday lenders had opposed earlier efforts to cap interest rates, arguing that rate and loan caps would wipe them out entirely. Payday America, the largest payday lender in Minnesota, spent more than $300,000 to kill the first bill. Nick Bourke, director of Pew Charitable Trusts' research on small dollar loans, said other states have implemented three types of reforms: lower interest rates, a limit on the number of loans and offering consumers a longer repayment period with more affordable payments. He believes the least effective of the three is the limit on the number of loans. Rep. Joe Atkins, DFL-South St. Paul, sponsored the 2014 payday lending reform bill. He said reform measures don’t seek to unjustly harm payday lenders but that “reasonable” interest rates need to be established.
