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Why now?

What is the intent of this legislation? To regulate the short-term loan industry in Pennsylvania and provide consumers with some of the lowest loan rates and strongest consumer protections in the nation.

What are short-term loans? Short-term loans are fee-for-service transactions that allow consumers to borrow money until their next pay period.

Who offers short term loans in PA? Many Pennsylvanians already use short-term loans but do so in such a manner that avoids current state regulations. These Internet loans are offered by tribal lenders and offshore lenders at excessive rates, few consumer protections and that aggressively target Pennsylvania residents. They do not want the financial reforms found in PACCA's proposal.

Why is it important to regulate short-term loans in PA? As long as current state law upholds the status quo ($.92 per $100 dollars borrowed, which isn’t in the marketplace today), Pennsylvanians will be forced to continue to use offshore and tribal operations that operate outside state regulatory authority. This leaves Commonwealth consumers at risk to a variety of financial scams as well as higher fee rates than those proposed by PACCA.

What about Consumers?

What about safety and consumer protection? PACCA's proposal contains many consumer protections which include:

  • Limits the debt exposure of consumers to a percentage of their monthly income
  • Requires a no-cost right to rescind
  • Requires a no-cost extended payment plan
  • Authorizes the state with new regulatory authority to ensure compliance and address any consumer complaints that may arise
  • Why are so many groups opposed to PACCA's proposal? Many of the organizations opposed to PACCA's proposed reforms offer services that compete in the marketplace with short-term loans and other forms of short-term credit. In fact, Pennsylvania taxpayers subsidized short-term loans offered by Commonwealth Credit Unions from 2006 through 2011 at rates and terms comparable to those in PACCA's proposal. If our protections became law, Pennsylvania consumers would have more market choice and they would likely choose the cheaper dollar cost option than stick with other more expensive credit products offered by those who oppose the bill.

    What is the impact of this new legislation on Pennsylvania consumers? Pennsylvania residents will no longer have to rely on unregulated lenders or overdraft and bounced check fees to address their short-term cash flow needs. The consumers will have a safe, regulated way to enter into a short-term loan to meet their credit needs.

    What is the impact of this legislation on Pennsylvania’s economy? A modest enactment will create over thousands of jobs, and hundreds of millions in economic activity throughout the Commonwealth.