Rep. Hamilton: High interest rate loans of up to 192 percent should not be legal in Indiana

INDIANAPOLIS – State Rep. Carey Hamilton (D-Indianapolis) today issued the following statement on Senate Bill 613, which would make massive changes to state laws involving the regulation of payday and subprime loan industries in Indiana:

“The payday loan industry is designed to take advantage of people who are forced into needing cash to pay for necessities in life: putting food on the table for their families, rent payments, car payments, and the like. Under the guise of offering a helping hand, these businesses loan people money at high interest rates that make it next to impossible for them to repay the balance before high interest rates begin to accrue. 

“State law currently defines any interest rate on a loan of more than 72 percent as felony loan sharking. This law has helped keep most installment loan companies away from Indiana.

“SB 613 would essentially legalize loan sharking in Indiana.  

“The bill will enable payday lenders to offer what are called unsecured installment loans, which can run from 6 to 12 months for amounts between $605 and $1,500. These loans carry interest rates of up to 192 percent. 

“This bill will enable installment loan companies to offer what are called small dollar loans of up to $4,000 that carry repayment periods of up to four years and interest rates of up to 99 percent. 

“You will notice that the interest rates I mentioned are well above the 72 percent figure currently considered felony loan sharking in our state. I introduced House Bill 1098 that would have capped interest rates on payday loans at 36 percent.  Unfortunately, my bill did not get a hearing in the House and a similar version was narrowly defeated in the Senate. 

“Since SB 613 started getting attention, I have heard from minority advocates, numerous veterans, faith-based, and charitable organizations. They’ve all proven with data that payday loans often aggravate the problems that compel people to use these high interest loans in the first place, frequently leading to bankruptcy and loss of jobs and homes. 

“Our job should be to better connect Hoosiers in need to emergency services that give them a chance to rebound rather than fall into a deeper cycle of debt.  SB 613 will hurt struggling Hoosiers, not help them. I hope my colleagues in the House will agree and kill this awful bill.”