A California bill that was already passed by the Assembly and is now in the Senate would put a cap on how much payday lenders may charge Californians for loans between $2,500 and $10,000. It would also bar California Financing Law (CFL) licensees from imposing penalties for prepayments.
According to AB 539’s co-author, Assemblywoman Monique Limón (D-Santa Barbara), the bill fixes a loophole that allows payday lenders to charge higher interest rates on loans that are higher than $2,500. This, she wrote in an op-ed, prompted lenders to “push consumers toward much larger loans.”
Alice Salles
Author
Alice Salles is a contributor to the Mises Wire based in Fort Wayne, Indiana.