Only four weeks after it was introduced, H. B. 1214, the Payday Loan Reform Act, will receive a hearing broadcast live on the internet. The bill would limit rates on payday loans and set up repayment plans for consumers unable to repay loans on time.

Of course the Center for Responsible Lending released a statement declaring the bill to be insufficient for protecting consumers. They want a 36% APR cap on all lending. (ie: put payday leners out of business.)

The bill would limit fees on payday loans to $15 for every $100 borrowed for two weeks. Compare that to a $35 overdraft fee or a $25 bounced check fee, and payday loans look like great alternatives. Try telling CRL that...

According to the CRL, this bill still allows those evil, nasty payday lenders to get consumers into those cycles of debt and rip them off. Keep in mind, they claim the average payday loan is for $300 and costs $800 to pay back.

For one, a vast majority of borrowers pay their loans back on time. For repeat borrowers, those getting a loan that is not their first, the default rates are right around 10%. That means those who get more than one payday loan pay it back on time over 90% of the time.

Doesn't sound like a debt trap to me. That's not even mentioning that it is physically impossible for a borrower pay $500 in fees on a $300 loan. Law prohibits lenders from infinitely extending loans. Usually after 12 weeks no more interest can be gained on a loan.

While the bill strikes a compromise between groups like the CRL and payday lenders, we at Check City still feel like the payday loan industry is not in need of regulation. The predatory lenders will get run out of business by the good lenders. It is self regulating.

In an industry that is so competitive, the weak and the illegal will cease to exist. Only those who charge reasonable rates, offer reasonable payback options and treat their customers well will stay in business in the long run. The government simply does not need to get involved with payday loans.