Title
Urging the Pennsylvania General Assembly to oppose legislation that would weaken existing protections against predatory lending and harm the citizens of our Commonwealth by legalizing high-cost, small-dollar loans, commonly known as payday loans, at rates exceeding those currently allowed by Pennsylvania law.
Body
WHEREAS, Pennsylvania already has one of the strongest laws in the country to guard against predatory payday lending; and
WHEREAS, Predatory lending practices including the making of small-dollar loans-often called "payday loans"-with excessive fees and interest, that are made without regard to the borrower's ability to repay the loan, but instead made based on the borrower's assets, such as a regular income stream and a bank account; and
WHEREAS, In states where predatory payday loans are legal, the average borrower is trapped in high-cost debt for nearly 200 days of the year, leading to financial harms like delinquencies on other bills, overdrafts on bank accounts, and even bankruptcy. According to a study on predatory lending conducted by the U.S. Department of Defense, "this debt trap is the rule, not the exception"; and
WHEREAS, Payday lenders prey on low-income borrowers, as confirmed by new study from the Federal Consumer Financial Protection Bureau (CFPB) that found that 68% of payday borrowers have income of $30,000 or less and a significant share of borrowers -- nearly 1 in 4-- reported income from public assistance or other benefits or retirement income; and
WHEREAS, Predatory payday loans also negatively impact the community and the economy, draining nearly $1 billion a year in economic activity. The clustering of payday loan storefronts creates the impression of a neighborhood in economic decline, leading local governments, in states where such high-cost loans are allowed, scrambling to mitigate their economic harm; and
WHEREAS, Philadelphia already faces the daunting challenge of ...
Click here for full text