(Sacramento, CA) – Assemblymember James C. Ramos (D – Highland) is proud to announce the Fair Access to Credit Act of 2019 (AB 539), which he is co-author on, is heading to the Governor to be considered for law.
“High-cost payday lenders are inflicting financial harm on vulnerable families, charging sky high interest rates that can put families in worse positions than before they took out a loan. The Fair Access to Credit Act of 2019 will put a cap on these high interest rates and allows families to utilize these services for emergency funds without getting locked into drawn out, expensive repayments schemes that will harm their financial well-being,” said Assemblymember Ramos.
AB 539 is authored by Assemblymember Monique Limón (D – Santa Barbara) and sponsored the California Association of Veteran Service Agencies (CAVSA), joining many consumer protection advocates, working families’ organizations, and religious organizations.
“Department of Defense studies have found that veterans are four times as likely to be targeted by predatory lenders. CAVSA is in strong support of AB 539, which seeks to address these predatory practices and their disproportionate impact on California veterans,” said CAVSA Executive Director, Chuck Helget.
Under current law, lenders are prohibited from charging more than 36 percent annual interest on loans of less than $2,500. Because there is no cap on loans above $2,500, high-cost lenders promote such loans, and place interest rates ranging from 132 percent to as high as 224 percent. For example, a $2,501 loan, only $1 above the limit, could have a 185 percent interest rate for 36 months, resulting in $13,996 total repayment, over five times the original loan.
AB 539 would place an interest rate cap of 36 percent on all consumer loans, plus the current federal rate (2.4 percent as of February 2019). This rate incentivizes lenders to underwrite loans to borrowers who have a reasonable ability to repay them. There are currently 39 states that place caps on these loans. This solution balances the benefits of access to capital while placing consumer protections.
The Governor has until October 13 to sign or veto AB 539. If no action is taken by the deadline, the bill automatically becomes law.
For Immediate Release
Monday, September 16, 2019
Contact: Brendan Wiles (909) 476-5023
Follow Assemblymember Ramos on social media: Facebook @AsmJamesRamos / Twitter @AsmJamesRamos / Instagram @asmjamesramos
Assemblymember James Ramos proudly represents the 40th Assembly district which includes Highland, Loma Linda, Mentone, Rancho Cucamonga, Redlands, and San Bernardino.
Assemblymember James Ramos secured $16 million in state funding for the 40th Assembly District in the 2019-2020 State Budget. Click here to read more.