Advocacy Groups Say Lending Bill Would Create Cycle Of Debt For Hoosiers


A large coalition of consumer advocacy
nonprofit and religious groups is calling on state legislators to scrap a
controversial short-term lending bill. The legislation passed through the state
Senate and now awaits a hearing in a house committee. While some lawmakers say
the proposal gives more options to Hoosiers with bad credit opponents say
it will only worsen their financial situations. Barbara Brosher reports. when Steven Bramer returned to Indiana after serving during the war in Iraq the
transition to civilian life was rocky. “I was in construction my whole life and
when I came back I was working for an engineering company and I was doing good
at first but I was drinking a lot also.” He came to this VFW in Hammond for help
and eventually found a new purpose helping other veterans navigate through
the changes that come with civilian life. “We help them with their claim and I
kind of helped guide him through the process.” That sense of direction allowed
him to focus on being a good husband and father but he soon hit another roadblock
a lengthy custody battle that he struggled to afford. “My lawyer was ready
to drop us right before the trial.” So Bramer did what he thought was best.
He took out a payday loan to cover the legal fees, and that started a vicious
cycle. “I tried paying it off at all at once so
if I took out like a $1,300 loan I’d pay back like $1,800 on the first.
Well even that’s unsustainable because then that’s $1,800 less for the next
month. So it’s it’s nobody really explains that part to you.” A Republican
state senator says he wants to provide more options for people like Bramer who
have bad credit but need loans Senate bill 613 would expand existing
payday loans and offer new borrowing options. “So what we tried to do was
create some options in that arena at rates that are 40 to 70% less than then
are currently available in payday lending.” Under the proposal the new six
to 12-month loans would have a lower annual percentage rate than existing
payday lending options. But it’s still 192 percent. And the small
dollar loans would allow people to borrow up to four thousand dollars with
an interest rate as high as 99 percent. That’s against current felony loan
sharking laws in the state which the bill would also change. On top of that
the legislation increases fees but Zay says it’s necessary. “It is giving them
access to something and honestly at a much better rate than is available in
the current mode with payday lending.” But a long list of groups opposes the bill
and rallied at the Statehouse earlier this week. This is the fourth year in a
row that a coalition has been assembled to fight against the continuous attempts
by out-of-state payday lenders and others to expand the harmful loaning
products here in Indiana.” The Coalition calls the proposal predatory and harmful
to Hoosiers. “We’re adding new products that are much larger much longer and so yes
while the APR is only a hundred and ninety two percent this is still an
unaffordable loan that’s conditioned on either access to your bank account or
access to say your car title.” Macey says she wants to see Indiana legislators
study payday lending before passing any bills expanding the industry. The
national nonprofit policy group Center for Responsible Lending is also against
the legislation. Its analysis of the bill says it creates an inescapable
cycle of debt for borrowers. “If SB 613 passes this will make Indiana among the
top 10 worst states in the country for predatory lending.” That worries Bramer,
who says the state’s current payday lending industry does enough harm. He’s
still trying to pay off the loan he took out about a year ago. “You think that
you could pay back something but then you know you don’t realize it’s like a
cycle and it that that cycle is so hard to get out of.” He hopes his story serves
as a warning to legislators. “As a whole this is not a good option and I hope
that they do vote this down.” For Indiana Newsdesk I’m Barbara Brosher. The bill has yet to have a hearing in the House’s financial institutions
committee.

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