Tuesday, May 10, 2005
Copyright © Las Vegas Review-Journal

Payday loan deal reached

Plan calls for extra repayment period

CARSON CITY -- Assembly Majority Leader Barbara Buckley, D-Las Vegas, and payday loan company representatives announced a tentative agreement Monday on a plan that will give customers who default on loans an additional three months to pay.

Buckley discussed the agreed-upon amendments to her Assembly Bill 384 during a Senate Commerce and Labor Committee hearing.

One amendment requires payday loan companies to offer their customers the extra time to pay what they owe. No additional interest or fees would be charged during the repayment period.

The customer who defaults on the repayment plan then could be taken to court. But Buckley said the interest they would pay during the period of default would be limited to the prime interest rate, plus 10 percent, or about 16 percent in today's market.

"You are getting a second chance," Buckley said. "If you want to pay, you have another chance."

"It is a good compromise," added Alfredo Alonso, a lobbyist for Money Tree, a payday loan company. "You don't have to take anyone to court. The customer can pay the debt."

Her payday loan bill was approved unanimously by the Assembly, despite complaints by some payday loan companies that it would put them out of business. Some companies charge 500 percent and higher interest rates on payday loans, which typically must be paid back in two weeks or a month.

Buckley met Friday with payday loan lobbyists in an effort to address their concerns about the bill. Senate Commerce and Labor Chairman Randolph Townsend, R-Reno, expressed support of Buckley's efforts Monday and announced his committee will vote Thursday on the new version of the bill.

Buckley emphasized that other key elements of the bill will remain in the final version. Customers can receive loans that total no more than 25 percent of their gross monthly incomes.

Payday loan companies can still charge whatever interest rates they please during the initial period of the loan.

An amendment would force payday loan companies who sue non-paying customers to file lawsuits in the counties where the customers live. Legislators were told last week that a Sparks woman who defaulted on a loan was taken to court in Las Vegas.

Buckley introduced the bill because of incidents in which people who had loans of $200 to $300 defaulted on those loans, were hauled into court and ultimately paid 10 times as much because of high interest rates, fees and court costs.