No. of Recommendations: 2
Borrow $5,000, repay $42,000

JoAnn Hesson, sick with diabetes for years, was desperate.

In May 2015, the Rancho Santa Margarita resident borrowed $5,125 from Anaheim lender LoanMe at the eye-popping annual interest rate of 116%. The following month, she borrowed $2,501 from Ohio firm Cash Central at an even higher APR: 183%.

While California has strict rules governing payday loans, and a complicated system of interest-rate caps for installment loans of less than $2,500, there’s no limit to the amount of interest on bigger loans.

State lawmakers in 1985 removed an interest-rate cap on loans between $2,500 and $5,000. Now, more than half of all loans in that range carry triple-digit interest rates.

Last year, state Assemblyman Ash Kalra (D-San Jose) proposed a bill that would have capped interest rates at 24% for all loans of $2,500 or more, calling triple-digit APRs “an abusive practice.” Kalra later pulled the bill and coauthored another that would also have put a cap on rates for loans of more than $2,500 by expanding a state pilot program that now governs smaller loans.

That bill, too, stalled. A handful of lenders — including Elevate and Check ‘n Go parent Axcess Financial — and industry trade groups spent more than $300,000 on lobbying against those and other bills last year.

California legislators..protecting the poor folk.
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