New Hampshire Legislators Might Consider Bringing Back Payday Loans

By: Javi Calderon
New Hampshire Legislators Might Consider Bringing Back Payday Loans

A proposal to bring back car title loans has already passed through the New Hampshire State Senate and is now awaiting a vote in Congress, which begs the question, are payday loans are next?

Auto title loans are short-term loans that use the borrower’s car as collateral. The next step would be cash advance loans, which are typically even shorter. Senate Bill 160, the “Credit Access Reform and Employment Act” is already on the table, outlining a proposal for a new-age payday loan – the installment loan.

Installment loans are two-week loans that can be repeated for up to 180 days, or roughly six months. The bill allows for interest of $15.50 per $100 lent for every two weeks.

In 2009 New Hampshire put into effect a 36% APR cap on short-term loans, effectively paralyzing payday lenders and virtually putting them out of business. Critics fear that the proposed installment loans would open the door to payday lending.

Matthew Houde, a Democrat from Plainfield, believes that installment loans would do just that, create a loophole for lenders to return to prominence in the state.

On the other hand, Tom De Blois, a Republican from Manchester, supports the bill and believes that there is already enough consumer protection on the books, considering that New Hampshire residents can borrow no more than 35% of their monthly income.

Since the new type of loan would operate outside of the 2009 law, Committee Chair Russell Prescott agreed that bill cold use a closer look and agreed to table it so the committee could reconsider the bill later on.

The debate of how much of a hand government should have in regulating financial products will continue, as seemingly state by state across the U.S. State legislatures argue over appropriate control of payday loans.