The proposal for constitutional amendment was introduced by religious leaders in Florida. They want to make changes in the current interest rate for payday loans. According to their opinion, now the acting percentage level is not correct, it should be 30 percent.
The proposal was made last month by Bishop Adam Jefferson Richardson. He is the main representative of the African Methodist Episcopal Church in Jacksonville. Richardson said that the percentage line should be 30 percent. He explained that his request applies to many families in Florida who pay loans and have many long-term debts. This is a real harm for the state’s finances, so the credit rate needs to be 30 percent.
Current interest rate
There is a state law and it says that an individual payday loan could be not more than $ 500 a day. But people take a lot of credits every day and then they do not have the opportunity to repay. This leads to the fact that they have a lot of loans, and then the overpayment for annual interest rate is more than 300 percent for the year.
The Center for Responsible Lending conducted a research last year. The results showed that the average payday loan is $ 399, 35. Everyone who takes a loan pays about $ 42.73. If we consider the 14-day period of the loan, then the interest rate is 278 percent over a year. If the loan is not blocked in time, then people can not overpay such a large percentage and the loan remains uncovered.
Advantages of the offer
Rev. Rachel Gunter Shapard is an associate coordinator for the Cooperative Baptist Fellowship of Florida. She said that the proposal to change the loan interest rate would not bring profit to religious leaders. It is an opportunity to help people and simplify their lives. Normal interest rate will help people to pay the loan and it will strengthen and improve the financial position of the state treasury.
Supporters of this amendment offer to make limit for large amount loans. People take such loans for business or buying a car or a home. But payday loans should have current interest rate – 30 %. If one of the members of Constitution Revision Commission nominates this offer, then it could be considered. If 10 members support it, then the commission will discuss this proposal. The results of their discussion will be in the ballot, at the end of 2018.