New law would allow 100% interest on payday loans; Louisiana governor vetoes what critics call a trap

Gov. John Bel Edwards rejected the new legislation that would have inflicted undue hardship on state residents.

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Democratic Louisiana Governor John Bel Edwards has vetoed new legislation that would have inflicted undue hardship on residents of the state who take advantage of payday loans. Many people use payday loans el cajon ca to cover routine living expenses like car payments, mortgage payments, credit card payments, utilities, food, and rent.

Senate Bill 381 was sponsored by Republican state Sen. Rick Ward, who said it would help those who use the loans to meet unexpectedly large expenses. The legislation would have offered installment loans up to $1,500. However, with fees and interests, the amount owed or principal could increase by 100%, according to The Advocate

Check ‘n Go Cash Advances and Payday Loans on Scott Street in Covington, Ohio, is shown in 2019. (Photo: Cara Owsley/The Enquirer, Cincinnati Enquirer via Imagn Content Services, LLC)

The report notes that with a “maintenance fee” worth up to 13% of the original loan amount, a $1,500 loan could have a fee that equals $195 a month. 

Edwards agreed with critics of the bill who complained that the predatory loans would have further trapped those with low income in cycles of debt. In his veto memo, he references Ward, writing, “despite the best efforts of the bill’s author, I do not believe that this bill adequately protects the public from predatory lending practices.”

“I have long been opposed to payday loan products,” Edwards added, “which are designed to keep vulnerable individuals in debt, oftentimes paying exponentially higher rates of interest than would otherwise be available at commercial banks.”

The governor said he “would be willing to support, and sign into law, a bill that reforms payday loans in a manner that provides appropriate safeguards on interest rates and fees.”

Capitol Drive Loan offers Milwaukee Installment Loans and cash advances, visit their website at to inquire.

The Advocate noted that Senate Bill 381 would not have replaced or reformed the existing system. Instead, it would have created a new product, with monthly payments over a three to 12-month term. 

According to research from The Pew Trust, “Black people make up roughly 13% of the total American population, yet they constitute 23% of all storefront payday loans.”

Pew finds that many payday lenders both in storefronts and online are reliant on return customers, noting that “repeat customers are also desirable because they default on loans at lower rates than new customers do. Industry analysts estimate that, even when charging a $25 fee for each $100 borrowed per pay period, an online lender would need the customer to borrow at least three times in order to earn a profit.” 

The University of North Georgia notes that many families that use payday loans are unbanked and underbanked and are disproportionately of Black or Hispanic descent, recent immigrants and/or undereducated. The university has a student money management center, which helps students establish emergency savings funds and financial plans. 

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