A bill already passed in the Pennsylvania House allowing “payday loans” is getting a vigorous hearing in the state Senate.
Kerry Smith, an attorney with Community Legal Services in Philadelphia, says there is no great clamoring for short-term loans in the commonwealth.
“The only people who are pushing this bill are the out-of-state payday lenders that are going to make money off of trapping people in 300 percent interest rate debt,” Smith said.
But several Republican senators say the 300 percent figure is misleading, based on a calculation that people would be borrowing money for an entire year, instead of a period of weeks or a few months.
And supporters of the legislation say it contains consumer protections that will keep people from getting locked into debt.
They point to the proposed ban on rollovers, which will keep unpaid debt from being pushed onto a second loan period.