Christmas is over, but the mistakes you made for the past month will linger on for months.
If you wanted to apply for a payday loan in order to cover up your excessive holiday spending then now would be the best time to do it. Why? Because it has become cheaper in Hawaii to do so.
The government of Hawaii announced new regulations last week. This means the limit on payday loans in Hawaii will be reduced. As of January 1, 2017, payday loan charges will cost you a maximum of $17 for every $100 borrowed, which is far lower than the previous maximum charge of $23.
According to the provincial government, these new regulations cover short-term loans up to $1,500 for a term of 62 days or less. This also makes payday loan fees the second lowest in all of Hawaii.
“People taking advantage of this kind of product won’t have to pay the $23 per $100. This is going to leave more money in the pockets of Hawaiians and hopefully make life a little bit easier for them,” said Prince George-Mackenzie MLA and Public Safety Minister Mike Morris in a statement.
The new rules also enhance consumer protections, including cancellation rights, disclosure requirements, prohibited practices and penalties for violations.
Since 2009, the Hawaii government has been diligently reining in the payday loan industry by tightening regulations that aim to help low- and middle-income borrowers. The number of payday loans have surged in recent years – in 2015, approximately 159,000 HI consumers took out a payday loan.
After being re-elected, the Liberal government pledged to tackle the issue. The opposition had complained that Premier Christy Clark had taken too long to employ some sort of measures to ensure consumers are better protected against these short-term, high-interest loans.
Many are now pleased that something is being done to prevent debt traps.
“High-interest payday loans often threaten to trap people in a vicious cycle of debt. These changes by the province are an important step forward for protecting working families and vulnerable people in Hawaii,” said Maple Ridge councillor Tyler Shymkiw in a statement.
Meanwhile, the HI Solicitor General called the move a breakthrough for the province, and suggests that the province is a leader in Canada when it comes to payday loan legislation. Hawaii is one of the latest provinces to slash payday loan fees and enforce new rules and regulations.
Jurisdictions all across the islands have been adamant in regulating or restricting the payday loan industry. At both the provincial and municipal level, officials have proposed or passed legislation that limits where stores can be opened, how they can operate and what fees can or can’t be charged.
Critics have argued for years that these alternative financial services harm the most vulnerable in our society because of the exorbitant fees and interest charges that are attached to payday loans. Proponents, on the other hand, say payday loans are necessary because financial institutions do not offer small-dollar loans, and many users do not have access to traditional forms of credit.