After nearly 20 years, the legislature rethinks payday loans


There are now more payday loan stores in Hawaii than there are 7-11. The state’s growing demand for payday loans is no surprise given the high cost of living on the islands. But with interest rates as high as 459%, lawmakers are demanding more regulation. HPR’s Ku? Uwehi Hiraishi has this story.

Walk into one of the island’s 91 chain payday loan stores, and all you need is a few recent pay stubs, a bank statement, and a blank check. , and you can get away with up to $ 500 in cash. Welcome to the world of payday loans.

“It’s taking advantage of people who don’t have access to the traditional financial system,” says Jeff Gilbreath.

Gilbreath is the Executive Director of Hawaiian Community Assets and Hawai? I Community Lending. The non-profit organization provides financial services to underserved communities. For the past three years, his organization has collected data on the payday loan industry in Hawaii.

When a person borrows $ 600 from a lender today, they pay $ 105 in interest, and that goes to payday lenders who are often not located in Hawaii, ”says Gilbreath,“ So this money doesn’t is not just picked up on the backs of mostly working people and very low income and low income families who have no choice but to be taken out of our local economy. “


Hawaii Community Credit

Map of statewide payday loan stores. Produced by Hawai’i Community Lending.

“Mother and area pop lender Richard Dan has been in the Maui small loan business for 42 years. He says interest is not the problem. He charges $ 15 interest on a $ 100 loan.

“Payday loans are for people in a hurry and they are designed to happen once in a blue moon,” says Dan. “The problem with payday loans, in my opinion, is that people are caught in the cycle. “


Credit Kama’aina Loan

Local lender Richard Dan operates his Kama’aina loans in Wailuku. He has worked in the small loans business for 42 years.

Dan has been a vocal opponent of the legislature’s efforts to further regulate the industry. An effort led by fellow Maui-an, Senator Roz Baker.

“The unregulated market we have is fraught with protections for consumers, interest rates can be sky-high and many of our families find themselves trapped in a lot of debt and unable to pay other necessary living expenses,” said Senator Baker.

During this session, Senator Baker introduced Senate Bill 3008, which, among other things, caps interest rates at 36% and authorizes the Division of State Financial Institutions to create a regulatory structure for the area.


Credit Friends of Rosalyn Baker

“And it really does offer some protection to consumers in order to help them, to help consumers access a loan that is within their means and ability to pay and it does not subject them to usury,” explains the Senator Baker.

Current usury laws allow interest rates of 12% or 24% depending on the lender. In 1999, the legislature created a loophole that allowed higher interest rates for “deferred deposits.” Basically legalize payday loans in Hawaii? I.


Dan says the proposed settlement favors outside lenders and the Internet at the expense of local lenders.

“The problems don’t lie with the small businesses here in Hawaii that charge 15%, principal and interest. There are no complaints about it, ”Dan says,“ If it ain’t broke, don’t fix it. “

Senator Baker’s bill stalled after a crossover in the House, as it has in the past. She was able to gut and replace Bill 2471 and keep her efforts alive.

“So hopefully when we get to the conference we can persuade them that we are not really trying to kick anyone out of the company,” says Senator Baker, “But we just think we want to have regulations, honest consumers. protections so that you know that people who need these payday loans can access them in a fair and reasonable manner.


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