Legislation Proposed to Cut Rates on Alabama Payday Loans
A state senator says a bill he introduced in the Senate would substantially reduce the interest customers pay when they take out Alabama payday loans.
The Legislature in 2003 passed a law legalizing cash loans and allowing the businesses to charge 17-point-5 percent per transaction.
However, Senator Bradley Byrne of Fairhope says most faxless cash advance loans are for small amounts and are to be paid back in a matter of weeks. He says if calculate the interest over a year’s time the annual interest rate is as much as - quote - “300 to 400 percent.”
The bill Byrne introduced yesterday would repeal the 2003 legislation and place payday loan businesses under the Alabama Small Loan Act. The act sets the maximum annual interest rate at 36 percent.