AARP survey shows Nebraskans support stronger consumer protections for payday loans

Nebraskans age 18-plus believe that it is important to strengthen consumer protection laws to prohibit excessive annual interest rates for payday loans, according to a new AARP statewide survey of 950 Nebraska residents. Additionally, Nebraskans believe that the very high annual percentage rates payday lenders in the state can charge consumers should be capped or limited.

In the report released today, more than three-fourths (77 percent) of Nebraskans age 18 and older support changes in state law to prohibit annual interest rates above 36 percent. More than half of Nebraskans (59 percent) have a very or extremely negative opinion of payday lending institutions.

Nebraska is among 36 states that permits payday lending. A payday loan is a short-term loan, typically for $500 or less. Current state law allows Nebraska’s 87 payday lenders to charge borrowers up to 461 percent annual interest.

“The survey reveals that the majority of Nebraska residents want to see increased consumer protections in the state’s payday lending industry,” said Mark Intermill, advocacy director for AARP Nebraska. “Nebraskans support payday lending reform regardless of age, political affiliation and income.”

Specifically, the survey found that Nebraskans support measures including:

• Capping payday lending rates to less than 25 percent annual percentage rate (68 percent);
• Ensuring that monthly fees are an affordable share of monthly income (72 percent);
• Limiting total fees collected on a loan to 50 percent of the original loan amount (over 60 percent);
• Requiring payday lenders to prominently and clearly display all fees for consumers (90 percent).

Legislative Bill 194, sponsored by State Sens. Tony Vargas and Lou Ann Linehan and endorsed by AARP, includes several consumer-friendly provisions that Nebraskans say they want. The measure caps annual interest rates at 36 percent; limits fees collected to 50 percent of the original loan amount; limits monthly loan payments to five percent of a borrower’s gross monthly income; and requires payday lenders to conspicuously post all fees at their offices.

“This survey should alert Nebraska lawmakers about the urgent need for reform in payday lending. AARP applauds State Sens. Vargas and Linehan for stepping up and introducing LB 194 to curb some of the industry’s most harmful practices and better protect credit-strapped, limited-income Nebraskans from financial exploitation,” Intermill said.

The AARP telephone survey of 950 Nebraska residents age 18-plus was conducted by Precision Opinion from Nov. 12 - Nov. 30, 2016. The survey’s margin of error is plus or minus 3.18 percent.