Jun 10, 2013 Quinn Thomas
Short term lenders could see stricter regulations in Rhode Island if a state official's call for rate caps is acted on by lawmakers. The Associated Press reported that State Treasurer Gina Raimondo wants to limit interest rates on short term loans.
Currently, a bill that that is being considered by officials in Rhode Island would limit the overall interest rate on short term products to 36 percent. The AP noted that current laws allow for rates as high as 260 percent.
Some lenders have expressed opposition to the proposed legislation, the news source noted, as they believe it could force them to leave the state. They argue that they provide a useful funding alternative for consumers that are limited in loan options due to poor consumer credit reports.
According to the AP, more than 200,000 short term loans were taken out by Rhode Island citizens last year, accounting for more than $78 million.
The National Conference of State Legislatures noted that current laws on the books in Rhode Island limit short term lending practices. The source states that the maximum value of a given loan may not exceed $500 and the term to pay off the debt must be at least 13 days.