INDIANAPOLIS (WTHR) - Is it really a consumer option or predatory lending?
The argument at the Statehouse Tuesday wasn't whether loans should be available to everyone, it's at what cost.
It is, unfortunately, a booming business. One-in-three Hoosiers already have debt in collections. So many will turn to payday lending for a solution at exorbitant interest rates.
Shamon Beckham needed help and turned to a payday lender.
"It's really a hard cycle, because as soon as you get paid, you have to pay it right back. Pay your bills and then you are going right back in there as soon as you pay them off," said Beckham, a former customer.
He is not alone. Payday lenders drained $60 million in fees from Hoosiers last year. A bill to cap the annual percentage rate to 36% like 16 other states failed in the Senate Tuesday, but the point was not lost.
"29 percent of the borrowers borrow 12 or more times a year," State Senator Greg Walker (R-Columbus) said on the floor of the Senate.
And unfortunately that is not for emergencies, but for regular reoccurring expenses.
"They tend to target low-income borrowers who already are stressed and don't have the money to pay these loans back," Erin Macey from the Institute for Working Families explained.
Worse yet, the lenders then have the right to cut the line on their rent, utility payments, car payment, social security and even the borrower's paycheck.
"Now is not the time to protect the payday loan companies. Now is the time to protect Hoosiers who are preyed upon by these loan companies," Sen. Mark Stoops (D-Bloomington) said.
Beckham just got off work as the Senate was debating another bill to allow payday lending to expand its offerings.
"With the percentage increase, it's not good. You just dig a hole for yourself. I'm glad I was able to get out of it," he said.
He recommends Hoosiers just borrow from friends or family.
Senate Bill 63 did pass the Senate by a vote of 26-23. It allows an expansion of payday lending in Indiana into new high-interest loan products. The bill is now headed to the House.