Forty-five Lawmakers Work to Stop Toxic Lending in AL
You don’t have to go very far to see payday lending shops in Alabama.
“The states around us have done things, so that has pushed a lot of payday lenders into Alabama. So per capita, we have the highest number of the payday loan shops in the state,” said Christopher Nanni, President and CEO of The Community Foundation of Greater Birmingham.
And it’s a big business. In 2015, payday lending companies made more than 115 million dollars off of Alabamians.
“We’re okay with making money, but if you look at the subset of people they are working with, they are low income people. That is the entire subset they are looking at. If you can imagine making 115 million dollars off of them, something is wrong with the model,” said Nanni.
 Lawmakers say it’s time to do something about it.
There is a bill in the House of Representatives that would put a cap on the maximum interest rate pay day lenders could charge at 36 percent per year.
The average rate for toxic loans in Alabama is 300 percent, but can go up to even 456 percent.
By passing this bill, supporters say this will help protect the vulnerable from getting stuck in debt.
“We find on an average a lot of these loans are rolled over. More than half of them are rolled over multiple times, around 6 times. So they are borrowing to pay for money they have borrowed to pay for. That drives the interest rate up to astronomical levels,” said Rep. Bob Fincher of Chambers County.
The bill will now go to a House committee. If it’s passed by the legislature, it will go on to the ballot for a general public vote.
