Lawmakers have one of the most important jobs in the state, deliberating on the rules and regulations that create the life we live within our state's borders. Now, their laws and ordinances don't override the Federal law but work in conjunction with them and cannot be enforced outside of the state limits. Recently, they have been locked in as they try and push laws surrounding health, drugs, income, and more before the next election.

Their two most recent proceedings had them voting on bills that could change the laws surrounding new license plate designs and abortion rights within the state of Michigan. They are back on the hot seat as more work is to be done, this time trying to make things easier on struggling families who need financial help. For years, Michigan lawmakers have been trying to limit the power of payday loans, they may have finally found the formula of details to do so.

Payday loans are exactly what they sound like, loans that someone can take out that are expected to be paid back in 2 weeks or less, hence the name payday. Michigan was the last state to legalize payday loans in 2005, making companies keep track in a statewide database to keep lenders from over-borrowing. If someone is in a pinch and needs some cash, they can take out up to two separate loans worth $600 a piece, which would have interest tacked on when being repaid. These are great options to help but they come with some misconstrued marketing, creating financial traps.

As stated by Democrat Rep. Abraham Aiyash of Hamtramck, Payday lenders are more likely to be present in minority or poor neighborhoods. Which is by design to garnish as much business as possible from the local residents as a study performed by Emory University Law in 2021 found that at physical locations 77% of payday lenders are targeting racial minorities. Lawmakers say that marketing is misleading as it offers a helping hand to those in need but doesn't provide the full picture, making the payback seem easier than it is.

Currently, there is no cap on the percentage that a payday lender may place on their loans, and some are taking advantage of this and having interest rates as high as 340% or higher. The new law would place a cap on interest rates at 36% on payday loans, making it harder for residents to fall into perpetual debt. This would bring Michigan in line with 20 other states who have already capped their interest rates.

The Center for Responsible Lending, a national critic of payday loans says Michigan borrowers reborrow the same day they pay off a previous loan 70% of the time. Meanwhile another portion of borrowers have 10 or more in a year making up 75% of Michigan Lenders' revenue yearly.

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