Conservative Viewpoints

"Government is not the solution…it is the problem" -Ronald Reagan

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New Hampshire Governor signs 36% interest cap into law

Posted by Stephen on July 17, 2008

Arizona could be the next state to end predatory 400% loans

New Hampshire Governor John Lynch signed a bill this week capping interest rates for payday and car-title loans at 36 percent. The cap will take effect January 1, 2009, protecting that state’s citizens from the cycle of debt created when payday lenders make high-interest loans to cash-poor borrowers. Payday lending was effectively legalized in New Hampshire when the state small loan rate cap was eliminated in 2000.

Payday loan customers take the first loan as an advance on their paychecks, but the terms require full repayment on their next payday. Most customers must repeatedly pay interest of about $50 on payday for a loan averaging around $300. The average borrower is caught in the system for nine cycles, or about four to five months, and some customers have paid interest for years before finding the resources to pay off the debt for good.

The victory by the anti-predatory lending coalition places the Granite State among fifteen states, plus Washington DC, that have put a stop to the predatory practice by capping interest rates at or around 36 percent annually.

At the request of the Department of Defense, Congress passed a 36 percent cap to protect military families across the country.

Republican state legislators in Ohio led an effort to pass a 28 percent cap in Ohio. After the governor signed that bill last month, the payday lending industry launched a ballot initiative for this November that, if successful, would overturn this important consumer protection and restore payday lenders’ legal right to make 400 percent interest loans in Ohio.

Arizona citizens will also face a choice this fall—between voting for interest rates of 391 percent, or letting the exemption for payday lenders expire as scheduled in two years. If the payday industry’s ballot initiative fails, Arizona payday lenders will fall back under the state’s 36 percent cap for consumer loans in 2010.

Stephen Winslow, the executive editor of Conservative Viewpoints, is a former manager of a payday lender.


One Response to “New Hampshire Governor signs 36% interest cap into law”

  1. Donna said

    Ok everyone. This is indeed a no-brainer. How can ANYONE justify charging a 300-400 percentage interest rate? Does the word “gouging” sound familiar here? Is it any wonder why you see these places on almost street corner? Please use your common sense when voting on this. If 36% isn’t good enough for these people, then close down. People are hurting enough already. This is just plain GREED.

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