Washington is already one of the most restrictive states for payday loan lenders, now a bipartisan bill in the state House would get rid of the system altogether.
House Bill 1922 would eliminate payday lending in the state and create an “installment loan” system that allows borrowers to repay a loan within six months. It also offers rebates on the loan fee if the loan is paid off early.
Currently, borrowers can take out a payday loan equaling $700 or 30 percent of their gross monthly income, whichever is less, and are limited eight payday loans each year. The payday loans must be repaid within two weeks.
Payday loans are heavily regulated in Washington state. Lenders charge high interest rates and the people who use them most are often low-income.
“Our current payday lending system is broken,” prime sponsor Rep. Larry Springer said in a statement.
The bill, modeled after a 2010 law passed in Colorado, was introduced Friday with more than 30 co-sponsors.