Short-term loan interest bill fails
Apr 13, 2012 Philip Burgess
Short term lending companies have to make their money in part by charging higher interest on loans because they are usually paid back in a small amount of time. Despite the potential for higher interest rates, these types of loans can be beneficial for people who need fast cash in the event of an emergency or financial hardship. Recently, a proposed bill that would have benefited lenders by allowing companies to charge higher interest on certain types of loans was defeated in the Mississippi Senate after passing in the House of Representatives, the Associated Press reported. Currently, the interest rate on small loans is at 36 percent. Section 4, Paragraph 1, Part A of the House bill 1396, known as the Mississippi Consumer Installment Loan Act, would have allowed lenders of a loan for less than $1,500 to charge up to 99 percent annual interest on the loan. The bill set the maximum rates for loans from over $1,500 to under $4,000 at 74.83 percent and interest for loans of $4,000 or over would not have exceeded 56,73 percent. The A.P. explained that the bill was denied a vote in the Senate Business and Financial Institutions Committee, by the order of Chairman Gary Jackson. Representative Bill Zubler was unhappy with the outcome, telling the source he planned on revisiting short-term interest rates for loans between $500 and $1,000.