The Online Lenders Alliance (OLA) has sent a letter to the California Assembly Apparitions Committee stating their “strong opposition” to AB 784. This bill, if enacted into law, will set a rate cap for consumer loans between $300 and $5000. OLA states this legislation has the potential to limit an important source of funds of underbanked consumers in California.
The OLA states in the letter:
“While those with strong credit histories have options such as bank loans, leveraging an asset, or tapping into savings, many borrowers who lack these alternatives turn to installment loans to meet their needs. These loans, which offer fully amortized, fixed monthly payments, have long been a foundation in providing California households with accessible solutions to addressing both planned and unplanned credit needs. Many consumers who use these loans do not qualify for traditional lending products. Installment loans represent the best option for their situation.”
The bill makes permanent a current Pilot Program for “Increased Access to Responsible Small Dollar Loans” (that is currently authorized through January 1, 2023. It also raises the max amount under the pilot to $5000.
A Committee hearing is scheduled for the end of this week.