It isn't easy sharing your family's financial difficulties with a room full of state senators and strangers.
But that's what Glenda Wood of Bellevue planned to do Tuesday, as she testifies on a bill (LB1036) that would restrict lending practices of payday loan centers.
She'd like to see the Legislature extend the time frame for the loans to be paid back, she said.
In 2007, Wood and her husband needed tires for their vehicle and took out a $500 payday loan without realizing, she said, they would have to pay the full amount back right away.
"And so we kind of got trapped in this cycle of basically just renewing that same loan over and over again, just paying the fees and not paying back the loan itself, " she said.
"We should have known better, but sometimes when you're just desperate to get something fixed, you do what you can."
At the time, she said, they needed the money and there was no other way to get it. But knowing what they know now, they shouldn't have taken the loan, she said.
"I can only hope that by sharing our story of what we went through for several years that it will help others, " she said. "Sometimes people get wrapped into something they don't fully understand."
The bill, introduced by Lincoln Sen. Kathy Campbell, would repeal the 34-day limit on a payday loan's duration and replace the short-term, lump-sum payment with one based on affordable payments over time.
It would require that loan charges be figured up front and spread out over time, so that each month a borrower makes substantially equal payments that go toward principal, interest and fees.
It would also set a maximum monthly payment at 5 percent of borrower income and limit maximum loan charges. Lenders could charge borrowers an interest rate of only up to 36 percent per year, and a maximum monthly maintenance fee of $20.
Campbell said the bill resulted from discussions of the Legislature's Intergenerational Poverty Task Force, and a continuing study of behaviors, conditions and policies that contribute to persistent poverty in Nebraska.
Brad Hill, president of the Nebraska Financial Services Association and a payday lender, said the number of payday loan companies has been dwindling, and if the bill passed it would eliminate those left or leave few operators.
With all the criticism payday loan companies get, he said, the Department of Banking, the Better Business Bureau and the Consumer Financial Protection Bureau get few complaints about them.
"This legislation is not consumer or complaint driven, " Hill said.
The proponents of the bill point to a Colorado law that eliminated the conventional two-week payday loan and replaced it with a six-month installment loan. The average loan of $389 repaid in three months now costs $116. And the average borrower pays 4 percent to 5 percent of their paycheck on repay, rather than one-third.
Hill said when the Colorado law went into effect in 2010, two-thirds of the businesses closed. Some have since come back, he said.
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