Veteran Calls Indiana Payday Loans Addictive
Inside Subprime: March 15, 2019
By Lindsay Frankel
The Indiana Senate has passed a bill that would allow higher interest rates on certain types of loans just after voting down legislation that would have capped interest rates on Indiana payday loans to 36 percent.
If approved by the House, Senate Bill 613 would give payday lenders permission to offer loans with longer terms and higher interest rates. Payday lenders can also continue to charge up to 391 percent annual interest on two-week loans, a practice considered predatory by critics.
A coalition of faith-based organizations, veterans’ organizations, and other consumer advocates gathered at a press conference at the Indiana Statehouse on Monday to express their concerns over the potential financial damage the bill could cause for Hoosiers.
Gen. James Bauerle of the Indiana Military Veterans Coalition noted that payday loan firms frequently target veterans. Indeed, the Wall Street Journal reported that these predatory lenders target servicemembers and their families at twice the rate at which they go after civilians, often concentrating storefronts in areas with military bases. And the CFPB announced last fall that it would stop its routine examinations of lenders for violations of the Military Lending Act, which was designed to protect servicemembers from predatory loans.
“Today we strongly oppose SB 613 and its new range of grotesque, usurious loans that trap borrowers in a debt crisis,” Bauerle said. “The bill this year is far worse and more far-reaching than any legislation in the past three years.”
38-year-old Steven Bramer Jr. also shared his personal experience with payday loans, which targeted him and his family with daily calls and emails advertising their loans when he fell behind on his car payments and utility bills.
“Payday loans are like an addiction,” Steven Bramer said. “At first, you get the money to pay off a bill that you had real quick, but then you have to keep taking out the loans to stay afloat.”
Supporters of SB 613 argue that high interest rates already exist in Indiana, and the new legislation will help the state better regulate high-interest loans. But critics said the allowable interest rates would cause undue harm to families that are already struggling financially. Consumer advocates also believe the bill is the result of industry lobbyists making contributions to lawmakers. Two payday loan companies gave more than $60,000 to lawmakers in 2017 and 2018, campaign finance records revealed.