The California legislature has been extensively considering AB 377. The AB 377 bill is intended to reform payday lending laws in California and has provisions that both expand and regulate the payday lending industry in the state.
California AB 377 creates new limitations
The payday lending industry in California will be limited by assemblyman Mendoza’s AB 377 . First and foremost, the bill will implement a suggestion made by California’s Department of Corporations in 2008. Consumer disclosures will be required to contain “explicit information regarding the actual costs of payday loans.” A new cooling-off period will also be implemented – a 24 hour period where no penalties will be charged for a customer returning a loan. Lenders who offer online payday loans will also be required to give extra disclosures with every loan that they offer.
AB 377 increases lending limits
Currently in California, loans from payday loan stores are limited to $ 300. AB 377 will raise that lending cap to $ 500. This move is prompted by the desire to bring available short-term loans more into line with the kinds of costs most residents of California face on a day-to-day basis. This increased lending limit also comes with a limit of 15 percent interest on the amount of the check advance. AB 377 also brings more income into the California budget with a 5-cent tax on each payday loan transaction.
Being responsible with short term loans
AB 377 has been amended three times as it makes its way through the legislature. In 2006, ten million individual payday loans were taken out in the state of California. In general, AB377 is written in a way that will encourage more responsible borrowing and lending. With more information and more rights, customers will be protected by AB 377. By allowing payday lending businesses to place a higher cap on lending amounts, the bill allows a service that millions of Californians use every year to be more flexible in meeting their customer’s needs.
Read the full text of AB 377 here
http://www.leginfo.ca.gov/pub/09-10/bill/asm/ab_0351-0400/ab_377_bill_20090623_amended_sen_v96.html
