SIOUX FALLS, S.D. (KELO AM) - The House State Affairs Committee today advanced a pay day lending bill that allows licensees to charge any interest rate agreed to between parties.
Lender lobbyist Brett Koenecke says the bill sets up a new code that insulates the industry and the people that rely on it.
Koenecke says the measure provides for payment of principal every month. He says that has been a sticking point. It requires the borrower to pay down the principal every month, they can't just let it ride. Koenecke says that's been a chief objection to consumer loans over the years.
Lobbyist for AARP South Dakota, Eric Nelson, says with unlimited interest rates, low income consumers face interest rates that average 574%.
Nelson says the $500 short term loan can quickly become $1,500. He says these types of fees can often lead to an increased likelihood of overdraft fees, delayed medical care and bankruptcy.
There are two, payday loan, interest limiting measures on the ballot. One caps the interest rate at 36 percent and the other at a lower rate but allows the parties to negotiate unlimited interest rates.