Delaware imposes new restrictions on payday loans

    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.

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