Assemblymember Ash Kalra to host press conference to announce introduction of bill to protect California families from abusive loans
For Immediate Release
February 14, 2018
* * * * * MEDIA ADVISORY * * * * *
WHAT: Assemblymember Ash Kalra to host press conference to announce introduction of bill to protect California families from abusive loans
WHEN: Thursday, February 15, 2018 – 10:30 a.m.
WHERE: California State Capitol Building, Room 317
WHO: Assemblymember Ash Kalra (D-San Jose)
Graciela Aponte-Diaz, Center for Responsible Lending
Rev. Phillip R. Cousin Jr., St. Andrews African Methodist Episcopal
WHY: Assemblymember Ash Kalra will announce legislation to address to address predatory lending in California. Triple-digit, high-cost interest rate loans have forced families to be caught an endless cycle of debt, which often leads to car repossession, wage garnishment, and even bankruptcy. Assemblymember Kalra's bill will aim to combat these types of financial abuses across the state. He will be joined by consumer advocates, faith leaders, borrowers, and community supporters.
BACKGROUND: The California Financing Law (CFL) regulates lenders who make unsecured and secured consumer loans, such as car title loans. Within the law is a regulated rate structure that governs consumer loans between $300 and $2,500.1 Yet, no rate structure exists for loans above $2,500; meaning that once the loan amount rises above $2,500 there is no limit to the APR that a lender can charge. However, prior to 1983 the rate structure applied to loans of $10,000 and under. According to a 2016 annual report by the California Department of Business Oversight (DBO), 58% of installment loans between $2,500 to $10,000 had 100% APRs or higher. In 2014, according to the National Consumer Law Center, these loans had a default rate of 20% to 40%, which makes it a win-win for predatory lenders since they are able to recoup the loan amount and profit within 6 to 12 months of repayment, and obtain a tax write-off for any unpaid principal.
1 Loans $300 and below, known as “payday loans” are regulated by the Deferred Deposit Transaction Law. These loans can legally carry APRs of 459%.