INDIANAPOLIS (WISH) — State lawmakers recently talked about creating more options for payday loans.
It’s just one of several topics during the summer study committees.
The U.S. Consumer Financial Protection Bureau says payday loans are meant to be short-term debts, but most people can’t afford to pay back all the money they owe by their next paycheck.
Indiana lawmakers talked Thursday about another option or idea: getting a payday loan from your employer.
Like many Americans, single mother Victoria Whittaker took out a payday loan a few years ago. “I really didn’t want to do it, but it’s like either that or get everything cut off. Kind of was like a need, yeah.”
State lawmakers understand that financial need of Hoosiers.
Indiana state Sen. Greg Walker, a Republican from Columbus, said, “In fact, just over half of Hoosiers in the state of Indiana borrow 12 or more times annually using a payday loan product. They are then spending $15, $30 for every $200 borrowed, repeatedly, over and over.”
The state legislature’s Financial Institutions and Insurance Summer Study Committee talked about other options for borrowers such as nonprofit lenders or payroll advances through your employer.
Walker said, “I’ve engaged in conversation with the Indiana Chamber of Commerce. There’s interest among employers to be able to do payroll advances with their own employees to create a better environment of trust.”
The senator said another idea could be to use secure payroll deduction and give financial literacy training along with an advance. It’s a concept-sparking conversation.
State Rep. Chris Chyung, a Democrat from Dyer, said, “When you’re in this position of desperation and need cash soon for whatever reason, whether it’s a medical emergency or your car breaks down, you can definitely go to your employer promptly first and ask them if they could advance you your pay before trying out one of these triple-digit APR (annual percentage rate) interest rate products.”
That idea appeals to Whittaker, who said her loan days are long gone.
“That’s awesome,” Whittaker said. “It’s a convenience. You’re not paying those high interest rates. You’re actually working it off, and that old school saying, ‘You can’t borrow yourself out of debt.'”
The summer study committee has three more meetings scheduled for September.