Huntsville City Council asks Alabama Legislature to further regulate ‘predatory’ payday loan industry

Bill KlingHuntsville City Councilman Bill Kling (File photo)

HUNTSVILLE, Alabama – The Huntsville City Council is asking the Alabama Legislature to place tougher restrictions on the state’s many payday lending and car title loan businesses.

Last week, the council unanimously passed a resolution calling on state lawmakers to “further protect the citizens of Huntsville and all of Alabama from predatory lending practices.”

Councilman Bill Kling said payday lenders’ interest rates are so high – sometimes in excess of 200 percent – that many borrowers struggle to pay down the principal on their loan. Kling, who sponsored the resolution, said he would like to see the Legislature place a “reasonable cap” on how much interest such businesses can charge.

“This affects a lot of people in Huntsville, and I would think it would have ramifications statewide, too,” Kling said Monday. “I just think there is a very compelling need.”

The Council for Fair Lending, a Birmingham-based trade association of cash advance and title loan businesses, could not immediately be reached for comment.

According to the City Council resolution, Huntsville has seen a “proliferation” of payday loan and title loan businesses licensed to operate under the Alabama Deferred Presentment Services Act and Alabama Shop Act. Their lending practices can have “devastating effects” on poor and elderly citizens while creating “broader economic consequences” for the city, it says.

Kling said he hopes a state lawmaker from Madison County will sponsor a bill placing more restrictions on “predatory lending.” The 2014 legislative session starts Jan. 14.

Councilman Will Culver acknowledged during last week’s meeting that he has borrowed money in the past from payday lenders.

“If you have kids in college, I don’t need to say anything else,” said Culver.

Article source: http://blog.al.com/breaking/2013/07/huntsville_city_council_asks_a.html