Michigan Senate Democrats, with some Republican backing, passed legislation to cap payday lending interest rates at 36%, a move that could potentially drive payday lenders out of the state. Payday loans, particularly prevalent in low-income and predominantly Black communities, often trap borrowers in a cycle of debt. Advocates for the bill argue it would prevent exploitative practices, with some pushing for even stricter caps. Payday lenders warn that such a cap would decimate their revenue, forcing them to shut down and pushing borrowers towards unregulated lenders. The bill still needs House approval and is facing a split chamber, requiring bipartisan support to progress further. The outcome could significantly impact the small-dollar loan market and those who rely on it.
Read the full article here.