PROVIDENCE, R.I. (AP) — A state senator is pushing for legislation to abolish an exemption that payday lenders use to charge up to 260 percent interest on the loans they provide.
Democratic Senator Harold Metts has introduced a bill that would force payday lenders to abide by the 36-percent cap currently imposed on conventional loans.
Metts says payday lenders have evaded the limits for too long.
The short-term loans are limited to $500 in Rhode Island, but officials say they can have enormous consequences. Senators cited a report in the Center for Responsible Lending that shows the loans often lead to inescapable debt.
Rhode Island and Maine are the only states in New England that allow the practice.
The Senate Commerce Committee will hold a hearing on the proposal Thursday.
