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Critics say the move will plunge poor people who become dependent on the short-term loans even deeper into a “debt cycle.”,Such loans are “seductive” to low-income workers facing unexpected expenses or who don’t have access to traditional banks and finance options, says Alice Vickers, attorney for the Florida Alliance for Consumer Protection, a consumer advocacy group.,“Consumers are rolling these loans over and over and over and ultimately end up paying way more for these loans than the original principal amount that they received,” Vickers told a House panel Wednesday. “Most [payday] borrowers in the state of Florida take out over seven loans per year. That’s not a way to run your financial budget within a family.”,Bills in the House and Senate would increase the cap on payday loans from $500 to $1,000 and allow lenders to give 60- to 90-day loans. Current law only allows 7 to 31 days for such loans.
The bills would also allow interest rates of 8 percent every two weeks.,As of June 30, there were 936 payday loan stores in Florida that issued 7.7 million loans in the previous 12 months, according to state data. Those loans totaled $3.06 billion, with lenders able to collect $306 million in fees.,Lobbyists for Amscot and Advance America, the two main payday lenders in Florida, note that only 1.8 percent of loans in Florida are in default. They say the bill is needed to comply with new federal rules issued by the Consumer Finance Protection Bureau in October.

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The rules encourage longer-term loans to give borrowers more time to pay it back and require lenders to ensure borrowers have the means to repay the loan.,“Many of [payday borrowers] avoid bad credit scores because they’re able to take advantage of this product to be able to pay their rent, to be able to pay for other things that may come up as a financial emergency,” said Meek.,In 2001, the Legislature passed comprehensive reforms restricting the amount of payday loans and setting up a database to record the loans to prevent borrowers from piling on multiple loans and debt at once. The law also put in a 24-hour waiting period before borrowers could get another loan, and gives borrowers who request one a 60-day grace period and financial counseling.,But this week, lawmakers in both parties said the change in the law is still needed and that payday loans, while not ideal, are the only option for people living paycheck to paycheck in need of quick cash.,Democrats warned poor workers could go to street-level loan sharks if payday loans weren’t available, and said payday borrowers weren’t unaware of the costly interest rates.,Rep.
Janet Cruz, D-Tampa, told the story of her mother using a payday loan when she was a child to repair a broken refrigerator.,Other groups like the NAACP and the AARP voiced opposition to the bill, however. Nearly 26 percent of payday borrowers are 60 or older, with many living on fixed incomes making it difficult to pay back the loans, said AARP lobbyist Dorene Barker.

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