I guess 48% is the new 36%

Progress Illinois hates payday loans. They put a new article out there about Rep.l Gutierrez.

“Illinois Rep. Luis Gutierrez, a longtime foe of the payday industry, is considering offering a payday-specific amendment to CFPA legislation when it reaches the House floor that would cap interest rates on payday loans at 48 percent — and also force lenders to provide a 90-day fee-free repayment plan if a borrower couldn’t meet the original terms.

“We think it’s important that we give the clearest, most specific guidelines and instructions to our new consumer protection agency as possible. And we think that if there is an actor in the nonbanking financial institutions arena … it is the payday lenders. Some of the most egregious violations in the consumer section occur under their watch,” Gutierrez said.

Do they think that an additional 12% annual interest (48% minus 36%) is going make payday lenders profitable? That’s rediculous. The payday industry can have a default rate of 20%. How do you cover these loans charging 48%?

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