This week Georgia lawmakers narrowly rejected a bid to repeal a state law banning payday loans. Supporters of House Bill 163 have argued that the state went too far in banning payday lending back in May 2004, and they want to bring the industry back, albeit with new regulations.
Usury laws limit the interest rate amount a lender can charge. In Georgia, an unlicensed lender cannot charge more than eight percent interest on a loan of $3, 000 or less.
They go on to state that:
The Industrial Loan Act of 1955 essentially made payday lending illegal, by requiring state licensing and registration and by imposing strict usury limits on small loans. In 2004, the Georgia General Assembly passed some new provisions to increase the fines and criminal penalties for people making small loans at illegal rates of interest. The law went into effect in May 2004, and though it is under review in the federal courts, it is currently in effect. Referred to as the Payday Lending Act of 2004, this law authorizes felony and racketeering charges against violators, as well as fines of up to $25, 000 per violation and a possible jail sentence of 25 years.
The new bill would’ve authorized payday lenders to charge a service fee of $15 per $100 loaned for each “deferred presentment services transaction.” In other words, every time someone needs to extend their loan, a lender could charge 15% of the balance. Unfortunately, when you compound this out, it becomes a pretty serious annual interest rate.