New Proposal To Restrict Payday Loans

New Proposal To Restrict Payday Loans

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MONTGOMERY, Ala. - A bill designed to make sure Alabamians don't take out multiple payday loans has cleared its first vote in the Alabama Legislature.

The House Financial Service Committee voted Wednesday to approve a bill that would set up a database of payday loans in the state Banking Department. Before a business could issue a new payday loan, it would have to check to make sure the customer wouldn't go over Alabama's limit of $500 for payday loans.

The bill's sponsor, Democratic Rep. Patricia Todd of Birmingham, says there is no way to enforce the $500 limit now and people take out new loans to pay off old loans.

Todd's bill is a compromise worked out with the payday loan industry. It does not lower interest rates on the short-term loans.

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