California AB 377 Aims To Reform Payday Lending Laws
In California, a new assembly bill — AB 377 — is working its way through the legislature. AB 377 contains provisions that expand payday lending, but it also contains provisions that will strictly limit the payday lending industry.
Article Resource: California AB 377 aims to reform payday lending laws
New limitations on payday lending with AB 377
AB 377, a bill originally introduced by assemblyman Tony Mendoza, creates new limitations on payday lending. The bill first implements a 2008 suggestion that was made by the CA department of Corporations. Every consumer disclosure about payday loans will have to contain "explicit information regarding the actual costs of payday loans." AB 377 will also require a one-day period of time where a customer can “give back†their loan without paying interest or penalties. AB 377 will also require online payday lenders to provide additional notices and disclosures.
Lending limit will be increased by AB 377
A payday loan store in California is currently limited to loans of $ 300 or less. That would be changed by AB377 – the new limit would be $ 500. Raising the cap is a measure intended to bring the California regulations on payday lending more in line with California's cost of living. The loan limit would also have a cost limit – lenders will not be allowed to charge more than 15 percent. The California budget would also see some benefit from AB 377, with a five-cent per loan tax.
Responsible lending and responsible borrowing encouraged
As it has been working through the legislature, AB 377 has been amended three times. There were about 10 million individual payday loans provided in California in 2006. AB 377 is a major payday lending reform that will, in general, encourage responsible lending and borrowing. With more information and more rights, customers will be protected by AB 377. By allowing payday lending businesses to place a higher cap on lending amounts, the bill allows a service that millions of Californians use every year to be more flexible in meeting their customer's needs.
Read the full text of AB 377 here
http://www.leginfo.ca.gov/pub/09-10/bill/asm/ab_0351-0400/ab_377_bill_20090623_amended_sen_v96.html
Tags: California AB 377, California assembly bill 377, California payday loans, payday lending law