INDIANAPOLIS -- A bill has been introduced that would increase fines and fees for short-term loans and establish a brand new option for borrowers.
Borrowers are already required to sign a contract before getting the loan. In that contract – the company outlines the details for repayment.
But the recently filed bill would remove the limit on how much interest these companies can charge, allowing lenders to charge 36 percent of the unpaid balance, no matter the dollar amount.
It would also increase delinquency and short-term finance charges.
READ | Payday loans leaving some Hoosiers bankrupt
The 64-page bill would create a new category of short-term loans under state law. With “Unsecured Consumer Loans” lenders could charge up to 45 percent interest. The proposal would also require a financial literacy course for anyone who takes out three short-term loans in two years.
Matt Bell, who’s lobbying for the new, short-term loans, says there are alternatives that are less expensive, regulated and offer the opportunity to earn credit.
But the CEO of Bright Point is questioning any talk of expanding options – saying the “high-cost loans have devastating consequences” for borrowers and community stability.
READ | Bill would cap payday loan interest rates
A separate proposal has also been filed that would cap the interest rate for payday loans.
The bill, filed by Sen. Greg Walker (R-Columbus) earlier this month, would cap small loan finance charges at 36 percent.
Neither bill has been scheduled for a hearing.
The video above shares the story of one Greenwood woman who says she's a prime example of what can happen when you turn to payday loans - and she's urging others to only look to them as a last resort.
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