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Payday lending reform passes Michigan Senate

Michigan Senate Chamber/Courtesy Photo

A bill to cap payday lending fees at 36-percent annual interest is heading to the Michigan House after passing the state Senate today

Current law provides a sliding fee structure that supporters of the legislation claim could lead to a debt trap—especially if borrowers use one loan to pay back another.

But Republican Senate Minority Leader Aric Nesbitt says capping the fees would harm the industry and lead borrowers to worse alternatives.

“If you think payday lender interest rates are high, wait until you hear what your local loan shark charges.”

However… Democratic Senator Sarah Anthony says loan options have remained in other states that have capped fees.

“I’m not concerned with keeping industries open that prey on working families. I’m interested in making sure that we have consumer protection laws that keep people safe.”

Another bill passed would require the state to publish annual reports on payday lending.

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