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Avoid Predatory Lenders - Don't Swim With the Sharks!

What is a payday loan?  Generally, a “payday loan” is a loan or cash advance of $500 or less that has to be repaid within a very short period of time, usually two weeks or until your next scheduled payday.   Some payday lenders also disguise payday loans with names like the so-called “Lease Agreement” where the lender makes a cash advance after the consumer “sells” an item of property such as a toaster, TV or coffee maker and then, in exchange for a very high “rental fee,” agrees to lease that item back until the next payday.
    
How do payday loans work?  You simply write a check in the amount of the loan, plus an additional fee imposed by the lender for making the loan.  The check is held by the lender until the due date and at that time, one of three things can happen:  (1) the lender will negotiate the check; (2) the borrower will redeem the check with cash and get the check back; or (3) the borrower will pay an additional fee to extend the due date for another two weeks.

What is “HB 163”?  HB 163 is a law being sponsored in the Georgia House of Representatives that would allow payday lenders to make high-interest payday loans.  The Bill allows lenders to charge $15 for every $100 borrowed.  This means that a $200 loan for just 5 days could equate to an annual percentage rate of more than 1,642%.

Who’s behind HB 163?  Rep. Thunder Tumlin (R-Marietta), the chief sponsor of HB 163, told a reporter with the Atlanta Journal & Constitution that the representatives of the payday lending industry asked him to introduce the bill.  The Bill’s other main sponsors are Rep. Earl Erhart (R-Powder Springs), the chairman of the House Rules Committee, and Rep. Al Williams (D-Midway).

Why is HB 163 A Bad Law? 

•  It allows payday lenders to charge very high interest rates.
  
•  It allows anyone with $25,000 in assets to apply for a license to become a payday lender so long as they pay the state $1,500.
  
•  It allows payday lenders to prevent consumers from filing a lawsuit.
  
•  It completely undoes a very strong anti-payday law passed in 2004 that declares payday lending offices to be a public nuisance, allows victims to sue a payday lender in court to recover illegal charges, punitive damages and litigation costs and makes payday lending a crime of a “high and aggravated nature.”  
  
  

CONTACT YOUR STATE REPRESENTATIVE AND SENATOR AND SEND THEM AN E-MAIL TO VOTE AGAINST HB 163.  To locate your state Senator and Representatives, click here.