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Alabama Lawmakers Debating the Fate of Payday Loans

Alabama Payday LoansAlabama lawmakers are currently listening to advocates and critics of payday and title loan financing. While advocates suggest that Alabama payday loans are important for people struggling from day to day, critics are saying that the loans are nothing more than “consumer debt traps.”

A public hearing, lasting two hours, was held by the state’s House Financial Services Committee to discuss three bills that, if passed, would reduce the costs of financing payday or title loans as well as increase the payment alternatives for applicants. The legislature has been debating over payday loan financing for years. So, the issue is not a new topic in the state.

Both house Republicans and Democrats seem to concur that lowering interest fees, some of which can amount to 450% on payday loans and 300% on title loans, is beneficial as is lengthening the terms for loan payback. One lawmaker, Rep. Rich Wingo, a Republican from Tuscaloosa, urged committee members to respond quickly to the payday and title lending measures and reforms. In a comment released to the press, Wingo said, “I think we are preying on the poor.”

However, business representatives from short term loan companies told committee members that lenders related that most of the customers understand the lending process. One participant, Roy Hutcheson of Title Cash, commented that the title lending bill is an effort by legislators to form a “nanny state” – something he believes is not necessary. He added, “Our citizens are able to protect themselves and make their own decisions.”(By definition, or according to the Cambridge Dictionary, a nanny state is one where government tries to offer too much advice or pass too many laws on how people should live).

Max Wood, who is another payday loan businessman, supported the comments made by Hutchison. He said that the industry is regulated and therefore is not a fringe-type business. According to Wood, about 400,000 Alabamans currently make use of payday lending. Wood said, “They depend [on the funding].”

Wood and several other payday loan business people requisitioned the committee to delay endorsing any new rules until regulations by the federal government are released in the spring. Representative David Faulkner, a Republican from Mountain Brook, said that the state should move forward and not wait. He said that lawmakers should pass the payday and title reforms right now.

In fact, lawmakers and representatives from different groups spoke favorably about passage of the proposed reforms. Jack Bradford of the AARP said that the state should not continue to “. . . . keep [payday and title borrowers] in a constant state of debt.”

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