Senate Democrats today were critical of a Republican effort to restore the use of predatory lending practices in New Hampshire.
“We capped the interest rate on these products three years ago for a good reason,” said Senator Matthew Houde (D-Plainfield), a member of the Senate Commerce Committee. “It makes no sense to me that we would restore this practice now at a time when so many New Hampshire consumers are already struggling financially.”
Senate Bill 57 was introduced today in the Senate Commerce Committee. The bill would allow lenders to issue high-interest cash loans in exchange for consumers offering the title of their automobile as collateral. The bill would further allow lenders to charge an annual interest rate of up to 300 percent. Democratic legislators capped such loans at an annual interest rate of 36 percent in 2008.
“These predatory products target the most vulnerable and desperate citizens. They manipulate consumers into a re-occurring cycle of debt by allowing them to roll the loans over up to 11 times – each time becoming more indebted,” remarked Houde, who sponsored SB 193 last year to close a loop-hole being utilized by lenders intent on continuing to charge high interest rates. “They take an individual already in a difficult situation and put them in an even worse position.”
The federal government has required a 36 percent cap on small loans made to members of the U.S. military for years.
“We should protect New Hampshire consumers from the same harmful lending practices that we protect our military men and women from. To do any less just doesn’t make sense,” added Houde.