House votes to limit interest on title loans
CONCORD — The House voted 212-129 to limit the interest title loan companies can charge customers for loans.
Under House Bill 562, title loan companies could charge customers 25 percent interest for the first month of the loan and then 3 percent a month.
The House voted to overturn the Commerce and Consumer Affairs Committee, which recommended the current 300 percent annual interest rate remain in place, but require the lenders to report the number of loans they make and how long it took customers to pay them off.
Title loan lenders are required to tell customers how much the loan will cost over a year.
Rep. Kermit Williams, D-Wilton, proposed the change to cap the interest rate to 3 percent a month after the first year, saying the companies claim the loans are short-term for a month or so, so they need to charge high interest rates to make the loans profitable.
He said his plan is a compromise between limiting the annual interest rate to 36 and continuing the 300 percent rate the companies say they need.
"Personally, I agree with the lawmakers in the 30 other states that outlaw title loans," Williams said, but noted this is the "Live Free or Die" state and people here want to make their own decisions.
Opponents argued the loans serve a segment of people with poor credit who cannot get a bank loan.
Rep. John Hunt, R-Rindge, said that when lawmakers limited the interest to 36 percent, the companies left the state and people with poor credit had nowhere to turn for loans.
"These loans are for the little guy, who has bad credit who is struggling," Hunt said. "Doing away with them maybe helping our conscience, but we will be hurting someone who really needs them."
Rep. Pam Tucker, R-Greenland, said the bill will put 40 people out of work when there have been few complaints about the companies.
"This is an ideological solution looking for a problem that will not only cost our state jobs, but remove a legitimate avenue for people who need short term loans," Tucker said. "This bill will drive folks who need this type of loan to unregulated, out of state Internet lenders and to illegitimate loan sharks."
The House voted 200-140 to approve Williams's amendment before passing the bill on the 212-129 vote.
The bill now goes to the Senate where it faces an uncertain fate.