A bill regulating and monitoring Delaware’s payday loan industry is about to become law.
Payday loans typically are small, short-term loans with high interest rates that effectively represent advances on a borrower’s next paycheck.
Borrowers usually see them as short-term fixes to make ends meet, but critics say high interest rates, combined with frequent loan rollovers, often leave borrowers trapped in a cycle of debt.
A bill being signed into law Wednesday limits borrowers to no more than five loans of $1,000 or less in a 12-month period, and lenders to no more than four rollovers of an existing payday loan.
The law also calls for the state to oversee a new database that lenders will use to determine whether a potential borrower already has an outstanding payday loan.