On Monday we blogged about AB 377 (Mendoza), which may allow Californians to create a check that is personal as much as $500 to secure a quick payday loan, up dramatically through the present optimum of $300. Under this proposed modification, a debtor whom writes a $500 check to a payday lender would get a $425 loan вЂ“ which needs to be repaid in complete in only a couple of weeks approximately вЂ“ and spend a $75 charge. ThatвЂ™s quite a payday for payday loan providers. But significantly more than that, a more substantial loan size would probably boost the quantity of Californians whom become perform payday-loan borrowers вЂ“ paying down one loan after which straight away taking right out another (and another) since they lack sufficient earnings to both repay their initial loan and fulfill their fundamental cost of living for the following a couple of weeks.
The committee passed the balance on a bipartisan 7-1 vote. The committee decided that allowing payday lenders to make much larger loans is sound public policy despite overwhelming evidence that payday loans trap many borrowers in long and expensive cycles of debt.