Stop The Payday Debt Trap


Resolution 13-04.41


WHEREAS, California's hard-working families pay almost $400 million in predatory interest rate fees annually to payday lenders, with the loans carrying up to a 459% annual percentage rate, causing the typical borrower to pay $570 for a $255 loan; and

WHEREAS, the high costs of payday loans coupled with short repayment periods create a debt trap for most payday loan consumers, with the average borrower taking out nearly one loan per month, generating an inescapable debt spiral, as well as almost doubling the likelihood that the borrower will be forced into bankruptcy (Vanderbilt Law School), and these effects fall disproportionally on low-income communities and communities of color, draining them of much-needed funds; and

WHEREAS, payday loans should be a little-used form of emergency assistance, and aspects of the business model that trap working families in a debt trap must be reformed;

THEREFORE BE IT RESOLVED, that the California Democratic Party supports reforms to California's payday loan laws, including but not limited to the following:

  • Limiting the number of payday loans payday lenders can make to a borrower each year.
  • Increasing of the amount of time a borrower has to pay back a loan.
  • Requiring that payday lenders allow a borrower who is unable to repay a payday loan on the due date to enter into a repayment plan.
  • Requiring that payday lenders determine the borrower's ability to repay the loan based on standard underwriting criteria; and
  • Limit the amount of interest to be charged in annum

BE IT FURTHER RESOLVED, that a copy of this resolution be sent to all Democratic members of the California Legislative Delegation. 

Supported by the Santa Clara County Democratic Party


Adopted by the California Democratic Party
At its July 2013 Executive Board Meeting
Hilton Hotel, Costa Mesa
July 21, 2013







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