Representative Johanson's Bill to Phase Out Predatory Payday Lending Schemes Signed Into Law
House Bill 1192 will help struggling individuals, families build credit
Photo: Standing with supporters of HB1192, Governor David Ige today signed the bill to phase out predatory payday loans. Photo courtesy Office of the Governor.
Honolulu, Hawaiʻi – Representative Aaron Ling Johanson's bill to phase out predatory payday lending schemes is now law after being signed by Governor David Ige during a ceremony today.
HB 1192 HD1 SD2 CD1, now Act 56, phases out Hawaiʻi’s payday loans by the end of this year and replaces it with more regulated and licensed installment loans beginning in 2022. The installment loans enabled by this legislation will have lower interest rates and fees, more flexible repayment schedules, greater transparency for the consumer, and ultimately more accountability as they will be licensed and regulated by the Department of Commerce and Consumer Affairs.
"Phasing out payday loans and creating a more consumer friendly installment loan will be a dramatic improvement for about 20% of Honolulu's population that relies on payday loans because they are underbanked or unbanked," said Johanson (Chair, House Consumer Protection and Commerce Committee). "Installment loans are better for the consumer because borrowers are able to build credit and preserve their access to capital on much more favorable terms."
Pew Charitable Trusts estimates that for the typical Hawai‘i payday loan of $300, a consumer ends up paying on average $529 over five months for that $300 loan.
“For too long, payday loans have trapped so many of our most financially vulnerable people in a cycle of debt that they cannot escape. This legislation not only corrects this serious injustice, but also and more importantly enables access to needed capital while providing a path to greater financial self-sufficiency and opportunity," said Rep. Johanson.
This bill is part of the House of Representatives' long-term goals of assisting those in need, reforming government, and providing economic recovery.
To see all bills passed by the 2021 Legislature, click here.