Senator Tony Vargas and Senator Lou Ann Lineham introduced a bill that will align payday loans more closely with a traditional loan structure.
LB194 will cap interest rates for payday loans at 36 percent, instead of the usually up to 400 percent rate. This bill will also provide for a small monthly maintenance fee, cap the percentage of income required in repayment at 5 percent of a borrower’s monthly income, and spread the costs out over a 6-month period versus the current 34-day model.
Sen. Vargas and Sen. Lineham’s argument is that payday lending leaves vulnerable populations trapped in debt that is often difficult to escape. High-cost, short- term loans such as payday loans, with interest rates above 400 percent, allow lenders to grab most of a borrower’s paycheck before other bills get paid.
LB194 was referred to Banking, Commerce and Insurance Committee on January 12, where Sen. Brett Lindstrom is Chairperson. The public hearing was this Tuesday, February 21, where organizations and members of the community testified and expressed their opinion to the committee members. After the hearing the committee will vote to send the bill to general file or postpone it.