CARSON CITY — A proposal to rein in payday loans took its first step towards becoming law Wednesday.
Assembly Bill 118 seeks to cap the interest rate of short-term loans — often called payday loans — at 36 percent annually, which would represent a drastic drop from the 500 percent or higher rates that are attached to most payday loans in Nevada.
The goal is to help prevent those who use the highly criticized loans from getting trapped in a “cycle of poverty,” said the bill’s sponsor, Assemblywoman 3, D-Las Vegas.
Swank said that a 36 percent cap would put Nevada in line with the federal Military Lending Act, which governs how much interest companies can charge active-duty military members.
“A 36 percent interest rate balances both that risk borne the business but also doesn’t overcharge and create that cycle of poverty that happens if people get stuck in these payday loans,” Swank said.
The bill was introduced in the Assembly Wednesday and referred to the Commerce and Labor Committee, where it will be discussed at a later date.
Swank proposed similar payday loan reforms in previous sessions, but they were not passed by the Legislature. But Swank said she’s “hopeful” that this session will be different as there is momentum behind such reforms, noting that voters in Colorado approved a 36 percent short-term loan cap in November via ballot initiative.