Payday loans could return to Georgia - WALB.com, Albany News, Weather, Sports

Payday loans could return to Georgia

February 23, 2007

Albany - - It's been the topic of legal controversy for years - businesses that offer high interest loans for people who need money in between paychecks. Georgia currently is the only state banning pay day loans. But now, state lawmakers are considering allowing these companies to return to Georgia.

Under the proposal, people borrowing money wouldn't face those high interest fees to take advantage of a payday loan. Still some financial experts don't think it's the best option.

They're a quick and easy source for cash.

"A lot of people they don't care, they need the money," says Mamie Harris.

Pay day loans. Georgia lawmakers banned the high interest short term loan companies three years ago.

"A lot of people don't make a lot of money and it takes two incomes in a household to make ends meet and then when they get down on their luck someone's always waiting out there to take advantage of them," says Mary Jane Brumbley.

Now lawmakers want to bring them back.

"There may be a workable situation for payday loans but not as it was structured," says Irma Whitten of the Consumer Credit Counseling Service.

Under House Bill 173, payday loan companies would have to cap fees at $15.00 for every $100.00 you borrow. The companies couldn't charge you interest and the max you would have to pay them is $112.50 and you couldn't borrow more than $750.00.

"It's always been said that you can't borrow yourself out of debt," Whitten says.

Her company tries to get people out of debt. She says even with the strict guidelines, payday loans wouldn't be the company's first recommendation.

"When we see clients who have used the services before, the first thing we realize is that they need assistance with their finances."

She says the goal is to get to a point where you won't have to borrow any money. The non-profit counseling service helps pay people's bills with small fees involved, which can be waived.

If the new bill passes, it could leave people weighing their options to get a quick buck.

The National Foundation for Credit Counseling says you could end up paying as much as 400 % interest using payday loans. Even with all of the controversy surrounding them, some payday lenders say there are some reputable companies out there. 

A House committee approved a plan Friday to relax the ban. The full House could consider the measure as early as next week.  

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