SEATTLE — The Seattle City Council says a new bill that would loosen restrictions on high-cost loans is a debt trap.
Currently, state regulations limit payday loans to $700 with a $95 fee to the lender.
Typically, the borrower would pay it back in two weeks, for a total cost of $795.
Some financially strapped customers take out new loans to pay the old ones.
Under two bills being considered in Olympia, House Bill 1922 and Senate Bill 5899, such loans would be raised to a maximum of $1,000. Customers would pay in six or 12-month installments with added fees.
For instance, someone who borrowed $700 would pay a total of $1,195 six months later.
Seattle-based lender Moneytree says the installments are much more affordable.
The Seattle Times reports the Seattle City Council, Mayor Ed Murray and City Attorney Pete Holmes signed a letter Monday urging Seattle lawmakers to reject the legislation.
KIRO
