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 somewhat through the present optimum of $300. A borrower who writes a $500 check to a payday lender would get a $425 loan – which must be repaid in full in just two weeks or so – and pay a $75 fee under this proposed change. That’s quite a payday for payday loan providers. But significantly more than that, a bigger loan size would probably boost the quantity of Californians whom become perform payday-loan borrowers – paying off one loan then instantly taking out fully another (and another) simply because they lack adequate earnings to both repay their loan that is initial and their fundamental cost of living for the following fourteen days.

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. One Democrat asked rhetorically: “Is the industry perfect? No. Does it offer a credit that is valuable for Californians? Definitely.”

This concern about credit choices had been echoed by a number of committee users. Legislators appear to genuinely believe that Californians who currently utilize payday lenders might have nowhere to get but “Louie the Loan Shark” if the continuing state managed to make it harder for payday loan providers in which to stay company or legislated them away from presence, as numerous states have inked. Continue reading →

On September 30, the California governor finalized SB 1235, which calls for non-bank loan providers as well as other boat finance companies to present written consumer-style disclosures for several commercial deals, including small company loans and vendor cash advances. Especially, the work requires financing entities at the payday loans for Minnesota mercy of the legislation to reveal in each commercial financing transaction — defined as an “accounts receivable purchase deal, including factoring, asset-based financing transaction, commercial loan, commercial open-end credit plan, or lease financing deal intended by the receiver to be used mainly for any other than individual, family, or household purposes”— the “total price of the financing expressed as an annualized rate” in a questionnaire to be recommended by the California Department of company Oversight (DBO). Continue reading →