Waging War On Payday Cash Advances In MichganBy John Mitsuda
Payday Loan Writer
Detroit, MI — “They are killing us,” said a 47-year-old Detroit man, who paid $90 to take out a $500 two-week loan last Friday at the Check ‘n Go store near the Imperial Super Market on East 8 Mile Road in Detroit.
“I know they overcharge because they know we need them,” said a 47-year-old woman who paid $34.35 to take out a $200 payday loan at a lender across the street, Advance America Cash Advance on 8 Mile Road in Warren.
Michigan currently doesn’t regulate payday lenders, but consumers could see protections if the bill passed the state House last month becomes law. House Bill 4834 will now go to the Senate. Gov. Jennifer Granholm, who vetoed a bill on payday lending last year, is expected to approve the current bill.
House Bill 4834 would:
- Put the maximum amount of a payday loan at $600.
- Limit customers to two outstanding payday cash advances. They could take a payday loan for up to $600 from one lender and take a loan for up to $600 from somewhere else, for a maximum of $1,200. Both loans could not be from the same place.
- Prohibit rollovers. Borrowers would not be allowed to pay off the old loan by rolling it over into another loan — and dig themselves deeper in debt by owing even more money in fees.
- Establish an installment plan. A consumer who takes out 8 or more payday loans in any 12-month period could use the option to get out of the loan cycle.
- Give consumers a variety of ways to resolve disputes, including a recission period.