JACKSON, Miss. (AP) – Gov. Haley Barbour has signed legislation that changes how payday lending companies operate while giving the industry at least three more years to do business in Mississippi.
The bill was signed Thursday and becomes law on Jan. 1.
The current law would have expired in 2012 – meaning payday lenders would have had to shut down in Mississippi if legislators had not renewed the law. Opponents of the industry had lobbied to let the law expire and effectively end payday lending in the state.
Sen. Walter Michel, R-Jackson, a member of the Senate Business and Financial Institutions Committee, said the industry was given a thorough review. He said no one voted against reauthorizing the law four years ago.
“This time, it was the will of the Legislature that the consumers get reduced fees,” Michel said Friday. “The bill that was passed will enable about 3,000 jobs to remain intact.”
A person seeking a payday loan in Mississippi writes a check for the amount borrowed, plus a fee that currently can be up to $21.95 per $100 borrowed. Most payday lenders now typically write 14-day loans.
The new law would give consumers up to 30 days to repay loans and cap fees at $20 for every $100 borrowed, up to $250. For loans of $251 to $500, the fee would be $21.95 per $100. Lawmakers said extending the time to repay the loan reduces the annual percentage rate paid by consumers by nearly half.
The new law also creates a hotline so consumers can report problems to the attorney general’s office or the state banking commission, Flaggs said.
The bill was opposed by several religious groups and advocates of the poor, who’ve called the industry’s lending practices predatory.
Under current law, check-cashing companies can charge fees equal to 572 percent annual interest in Mississippi, one of the poorest states in the nation.
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