Do Californians need more debt?
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Do Californians need more debt?
Asm. Tony Mendoza (D-Los Angeles), seems to think so. Mendoza, the sponsor of a payday lending "reform" bill that would actually make it easier for Californians to take out payday loans, has now amended the proposal so it will also put folks deeper into debt. Asm. Mendoza has now modified his already-flawed bill to include a provision that would increase California's loan limit from $255 to $425, a move that would do nothing but pad payday lenders' bottom line with funds stripped from the wallets of hard-working Californians. Simply put, if borrowers are unable to afford to pay back $300 (once fees are added in) in one pay period, how are they going to pay back $500?
Dear [ Decision Maker ] , Increasing debt is rarely a good solution for those already saddled with debt and income problems, yet by increasing payday loan amounts that is precisely the prescription that AB 377 proposes. The bill pretends to be reform; the reality will be even more borrowers trapped in an unaffordable cycle of debt. The interest rates on a payday loan in California can be as high as 459 percent! Already 15 other states -- covering one-third of all Americans -- have agreed that these interest rates are too high and hurt consumers; it's time California does too. Please vote NO on AB 377!
Sincerely, |
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| Background Information |
AB 377 was already a step in the wrong direction. The bill would make payday loans even more readily available by authorizing internet payday loans—the most dangerous type of payday loan—and would have required lenders to offer borrowers one repayment plan option per year. That sounds good, but each of the plan's four payments would be $75--$30 more than the $45 it would cost to get a whole new loan! Which option do you think cash-strapped borrowers would be forced to take? To top it off, these industry-supported repayment plans have done nothing to reduce the debt trap in the 5 states that have adopted them.
