March 1, 2017

Today, Rep. Fincher and 44 co-sponsors introduced HB 321 into the Alabama House, calling for a Constitutional Amendment to set the maximum interest rate a lender may charge “on a consumer loan, line of credit, or other financial product” at 36% APR.  A copy of the Bill is linked above.

As consumer finance companies well understand, such a limit would end most all sub-prime consumer loans and sales made in Alabama, including traditional installment loans, credit appliance, furniture and other product sales, and automobile and boat financing.  The ramification of such a law would have draconian consequences to Alabama’s consumers.

While I understand the intent of the proponents of this measure — to reign in consumer loan products that create a cycle-of-debt — the result of the passage of this Bill and the adoption of such an Amendment would cripple the very people the Bill is intended to help.

There are other more appropriate approaches to address loan products that are problems for Alabama’s consumers.  The Governor’s Task Force on Consumer Credit Laws has been hard at work on effective solutions.  This Bill’s approach is not one of them.  The Alabama Installment Lenders Association will be joining with others to explain the serious problems with this Bill and the severe implications for Alabama’s consumers that would result from its becoming law.

Maury Shevin

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