State representative revives effort to cap interest on payday loans

PROVIDENCE – Rep. John J. Lombardi, D-Providence, has once again submitted legislation proposing to cap annual interest rates on payday loans.

The bill submitted to the R.I. House of Representatives earlier this month would prevent payday lenders from charging more than a 28% annual percentage rate on loans. Current policy allows payday lenders to charge up to 261% interest on loans under $500, a rate Lombardi called “predatory” and one that disproportionately hurts disadvantaged communities.

The bill would also require a maturity date greater than 90 days, cap fees and interest at 60% of the original principal and allow incremental monthly payments of at or below 25% of the original principal.

Lombardi has submitted similar legislation for at least seven years, he said. Regardless of whether his bill passes, he insisted, “You’ve got to keep trying.”

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The bill has been referred to the House Finance Committee.

Nancy Lavin is a staff writer for the PBN. Contact her at Lavin@PBN.com.

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