Bill Limiting 'Payday Loan' Rates Pre-Filed in Kentucky General Assembly
State Sen. Reggie Thomas has pre-filed a bill for the Kentucky General Assembly's next session that is intended to cap the amount of interest charged by the providers of so-called “payday loans.”
The legislation would gradually lower borrowers' rates according to how much they actually borrow. If passed, it would be the first successful regulation of payday loan interest rates in the state.
The lenders can currently charge customers up to 391 percent annual interest on their original loans.
The industry has donated tens of thousands of dollars to both Democrats and Republicans and has spent handsomely lobbying the General Assembly. Despite that, Thomas thinks his bill has a shot.
“I don’t think any kind of lobbying efforts or campaign contributions should frustrate or thwart any discussion when it comes to policy that’s good for Kentuckians," said Thomas, a Lexington Democrat. "So that’s not in my mind at all, in terms of trying to do something that’s beneficial to Kentuckians in terms of who donates to whose campaign.”
According to a 2012 report by the Pew Charitable Trusts, Kentucky is one of 27 states that doesn’t limit the amount of annual interest that providers of payday loans can charge customers.
The 2015 General Assembly session begins in January.