A state lawmaker from Lexington is proposing legislation to cap interest rates on so-called “payday loans” in Kentucky.
Reggie Thomas, a Democrat from the state’s 13th Senate district, has filed a request for a bill to be introduced in the 20-15 legislative session. It would curb what many have criticized as predatory practices by the industry.
Thomas’ bill would require lenders to display their interest rates and to cap maximum rates along a sliding scale relative to a borrower’s income and loan amount.
"When you have to pay out such an extraordinary high rate of interest, it takes money away from fundamental needs these families have: Buying clothes, feeding their children, buying necessary medicine," Thomas said.
"So it has a harsh impact on the lives of these families."
According to a 2012 report by the Pew Charitable Trusts, Kentucky is one of 27 states that doesn’t limit the amount of annual interest that payday loan lenders can charge customers. Rates can be as high as 391 percent of the original loan amounts.
Previous legislative efforts to cap interest rates of such lenders have failed in the General Assembly.
