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Legislature considering allowing payday loan lenders

CONCORD Usury is in the eye of the beholder, said John Hunt, R-Rindge, chairman of the House Commerce Committee, as his panel on Tuesday considered allowing high-interest payday loans in New Hampshire once again.

House Bill 160 refers to them as installment loans, but they would be very similar to the loans offered by the payday lenders that fled New Hampshire after the state capped interest rates at 36 percent.

Payday loans are different from title loans, for which the borrower gives the lender title to his or her car in exchange for a short-term loan. If the loan isnt paid back in a month, the borrower risks losing the car, and often rolls the loan over at a high interest rate. Lawmakers voted to bring those loans back in the last session, but Gov. John Lynch vetoed the bill. The House overrode his veto, and the fate of that industry rests in the Senate, which wont take up vetoes until next year.

In the case of installment loans, the borrower promises to sign over his or her next paycheck, at even higher interest rates than a title loan. HB 160 has certain protections against loan rollovers, such as a cooling-off period of a couple of days. That, however, is only for those who pay off their loan early. No such protection exists for those who dont, pointed out Sarah Mattson, a New Hampshire Legal Assistance attorney who has led the fight to outlaw the industry.

You pay off your loan with your paycheck. You dont have money for rent. And you get a new one while you are in the store, she said. There is nothing to prevent back-to-back loans. Alex Koutroubas, a lobbyist for Advance America, a national payday lender, acknowledged that Mattson was right.

Still, said Rep. Fred Rice, R-Hampton you cant legislate against stupidity, he said. If the interest rates are too high, dont go there. It boils down to free enterprise.

Banks are starting to go there, said Jenn Coffey, R-Andover who chairs the committees banking subcommittee. Wells Fargo is starting to offer high-interest short-term loans that would violate state law. But the state Banking Department cant go after the bank because they are banks and are federally chartered. Besides, said Hunt, Wells Fargo doesnt even have any branches in New Hampshire.

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