Recently, the New Hampshire subcommittee of the state house voted not to cap the interest rate on payday cash advance loan lending. The payday loan industry had been lobbying diligently the state lawmakers to stop the controversial bill from imposing a thirty-six percent interest rate cap on all cash advance loans and vehicle title loans issued within the state.
The cap would have been the end of the New Hampshire payday loan industry; hence, some swayed members of the subcommittee expressed their belief that the proposed interest rate cap was too low, keenly aware of the negative impact on the payday loan industry.
Instead of the interest rate cap, the New Hampshire House subcommittee is planning on a fixed finance charge for all payday loans. While many people in the state get access to cash advance loans through stores, some are getting their next personal loan online in the form of a faxless payday loan.
A no fax payday loan allows the borrower to get a personal loan in a quick and simple manner. The borrower no longer has to wait for a decision, within a few minutes he will know whether he is approved or not. This is a more convenient method than going to the store and waiting in lines to access your cash. Also, it means that the borrower has nothing to fax and no documentation is required.
However, the cash advance lenders are breathing a collective sigh of relief. If the proposal would have gone through, the interest rate cap would have cut fees from an average of twenty dollars per one hundred dollars borrowed statewide, to just under two dollars per hundred.
Now, the House subcommittee is thinking about a flat cap of fifteen dollars per one hundred borrowed over a normal pay-period. Payday loans are small, short-term personal loans anticipated to cover a borrower's expenses until his next paycheck or payday.
Cash advance critics, state that these types of short-term loans are a debt trap targeting low-income, unsophisticated consumers. The critics also contend that even a fifteen-dollar finance charge represents over three hundred percent interest on an annualized basis.
Lawmakers in New Hampshire will fully take a decision at the end of the month about endorsing the interest rate compromise with the payday industry. The industry trade group Community Financial Services Association of America was happy with the decision of the legislature.
The legislature will not see this issue come to a rest, the House expect opponents of the compromise to put up a fight. The consumer representatives believe that even a $15 cap is too high; they want the payday lending industry completely run out of town. It will be interesting to see how the issue is finally settled in New Hampshire.