House kills payday loan revival

A bill that would allow a successor to payday loans didn’t make it though the New Hampshire House on Wednesday, and it was almost killed. However, it was re-referred to the House Commerce Committee, where it can come back to fight another day.That Senate Bill 160 didn’t make it though the conservative House resulted in cheers from opponents of high-interest short-term loans.”It’s very heartening to see that most people in the House stood up for consumer rights,” said Sarah Mattson, who lobbied against the installment loan bill.But it shocked others, like Rep. Steve Vaillancourt, R-Manchester. “What have we come to? We were elected to get government off our backs and no more nanny states. I’m really disturbed,”Since 2009, the state has effectively banned payday loans (loans made against a paycheck) and title loans (loans made against a car title) by setting annual interest rates at 36 percent, the same cap the federal government sets for such loans to active members of the military.The House last week passed House Bill 57, allowing title loans, by a narrow 180-171 margin, sending it to the governor, who had signed the aforementioned interest cap into law. The margin is certainly not veto-proof, but Governor Lynch hasn’t said whether he will exercise that veto.Payday loans were more widespread than title loans, required weekly rather than monthly payments, and therefore had higher annual interest rates.The loans allowed in SB 160 seem like a toned-down version of payday loans, allowing 14-day loans with some limits: no more than $1000, or a third of a person’s gross income, could be borrowed at a time, and the loan could only be extended for six months.Still, a $500 loan rolled over for six months would result in a $1,130 pay out, according to Rep. Donna Schlachman, D-Exeter.”This will make loansharking an acceptable business,” she said. “It’s state-regulated usury,” echoing the words of Rep. Neal Kurk, R-Weare, who came out against SB 160. Another Republican, Tony Soltani of Epsom, said that the allowed 400 percent APR amounted to stealing.But House Commerce Committee Chair John Hunt, R-Rindge, defended the bill, emphasizing that “It’s not a year loan, it’s a two-week loan. You can’t compare it to an auto or a home loan. It’s not a fair comparison.”Those with credit cards have access to a quick cash loan, he said, and with credit card fees counted, it results in the “same outrageous rate.” But many people don’t have access to credit card, so preventing installment loans “is not fair to the little guy.”Supporters also said that at least such loans would be regulated, unlike those offered by Internet and offshore lenders, echoing the line by Advance America, the nation’s largest payday loan provider.Despite the push, the bill didn’t make it over the top. It failed to pass by a 186-179 vote. Yet an attempt to kill it also failed by one vote: 184-183, and it was finally re-referred to committee.That means it may be brought back again, and probably will, but exactly when is anybody’s guess.”We look forward to continuing to work with legislators to help ensure that regulated lenders can meet the need for short-term credit, while providing important consumer protections that encourage responsible borrowing,” said Jamie Fulmer, an Advance American spokesman from the company’s South Carolina headquarters. — BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW

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