The Louisiana House of Representatives is set to vote on a bill that would expand triple-digit interest lending in the state. Senate Bill 381 by Sen. Rick Ward would add another product to what predatory lenders can currently market. Under the bill, loans could carry triple-digit APRs, create a longer-lasting debt trap with terms of three months to one year and cost as much in fees as the loan amount. 

“Instead of debating reforms such as a 36% rate cap that would restore reasonable protections against predatory lending, legislators are actually considering expanding the threat of the debt trap and the number of predatory products that can harm Louisiana’s working families as they struggle to meet their financial obligations,” said Davante Lewis, Director of Public Affairs and Outreach for the Louisiana Budget Project. “This is shameful and reveals a true lack of concern for low-income families in favor of predatory lenders that have designed a system of stripping them of their scarce wealth.”

According to analysis from the Center for Responsible Lending, Senate Bill 381 would legalize interest rates over 300% APR for loans lasting up to one year. This would allow payday lenders to make loans up to $1,500, much larger than those that are currently allowed.

Payday loans create a dangerous trap that keeps struggling folks in cycles of debt. In Louisiana, these loans carry annual percentage rates of interest averaging 400%. While these high-cost loans are marketed as quick solutions to a financial emergency, the lenders’ business model is based on repeat borrowing, not the one-time assistance they advertise. 

“Payday lenders already drain more than $145 million in fees from Louisiana families each year,” Lewis said. “We need to put a stop to this predation immediately, not just add to the burden of families in financial need.”

Louisiana Budget Project, advocacy groups and other organizations have signed a letter opposing Senate Bill 381, while only two lending groups have voiced their support in public hearings.