Senate Bill 632 will cap payday lending interest rates at 36%, address economic disparities
LANSING, Mich. (February 29, 2024) – Yesterday, Sen. Sarah Anthony (D-Lansing) testified before the Michigan Senate Finance, Insurance, and Consumer Protection Committee on her legislation, Senate Bill 632, that would cap interest rates on payday loans in Michigan at 36%. The committee also heard personal perspectives and supportive testimony from an array of residents and organizations that underscore the need to pass Anthony’s legislation. More than 100 organizations from around the state also provided written support for the bill.
“Data shows that the payday lending industry targets the most vulnerable communities across our state, particularly those in rural areas and communities of color,” said Sen. Anthony. “It is crucial for us as lawmakers to hear directly from residents on this issue, and champion fair financial practices that will empower Michiganders. By fighting against predatory practices in lending and advocating for equitable access to financial resources, we can help families break the cycle of financial instability, build generational wealth, and ensure a strong economic foundation.”
People who use payday lenders are more likely to file for bankruptcy than non-borrowers with similar financial circumstances. In addition, 70% of payday borrowers in Michigan reborrow the same day they pay off a previous loan. and 75% of payday lenders’ revenue comes from borrowers caught in 10 loans per year. Studies also show that payday lending stores are more likely to operate in Black and Latino communities, which can contribute to long-term economic disparities.
The Community Economic Development Assocation of Michigan, the Michigan Catholic Conference, Project: Green, and the Center for Responsible Lending testified in support of the bill yesterday. If this legislation passes, it will bring Michigan in line with 20 other states and the District of Columbia.
To help send a strong message on this issue, Sen. Anthony is urging Michiganders to join the fight against predatory lending in Michigan. Interested residents can visit SenatorAnthony.com to share their story and become a citizen cosponsor to help restore “Justice in Lending.”
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