Payday bill passes in Washinton state

On Jan. 1st, payday loans will have tighter restictions in Washinton. Here are the basics:

  • Limits the size of a payday loan to 30 percent of a person’s monthly income, or $700, whichever is less.
  • Bars people from having multiple loans from different lenders, and sets up a database to track the number of loans taken out by people
  • Enacts an installment plan for people who fall behind on their loan payments. Customers would have up to 90 days to pay back a loan of $400 or less, and 180 days for a loan of more than $400 without a fee. Currently, a borrower has 60 days and must pay fees.

The fees are not capped, so realisticly, they could charge a premium and make the payment plan part of every loan. It could work like an installment loan where you could charge $400 on a $400 loan and give them 104 (90 plus 14) days to repay it. It could be like 8 payments of $100 over 104 days. I just don’t see charging $15/$100 and giving borrowers 100 days to pay it is profitable. Besides, there will be people that do not pay at all.

You can read more about this law in the Seattle Times.

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