State House Committee Advances Payday Loan Expansion Bill


HB 5097 allows loans of up to $2,500 with fees equivalent to 132% APR

Lansing, MI – The House Regulatory Reform Committee voted to advance a bill today that would allow payday lenders to offer longer-term loans that put vulnerable Michiganders at risk. 

HB 5097 would allow loans of up to $2,500 with fees equivalent to an annual interest rate of 132%. This is well above the 36% cap that many states place on consumer loans to protect working families. It is also well above the 25% cap on small loans under the Michigan Regulatory Loan Act and the Credit Reform Act. Under this new bill, a $2,500, two-year loan would require the borrower to pay back $7,187.08. 

While access to credit is an important issue, payday lenders make loans without assessing the borrower’s ability to afford them, often resulting in a cycle of debt. Seventy percent of Michigan borrowers reborrow the same day they pay off a previous loan. Borrowers who take out these loans often end up defaulting, closing their bank account, and even filing for bankruptcy. 

“Michigan lawmakers have an obligation to protect consumers, not subject them to another high-cost product that will trap them in a cycle of debt,” said Sandy Pearson, executive director of Habitat for Humanity Michigan. “This product only serves to make payday lenders more money at the expense of Michigan’s hardworking families.”

HB 5097 goes next to the Ways and Means Committee, which is chaired by bill sponsor Representative Iden (R – Oshtemo). Bill provisions that perpetuate the cycle of debt include:

  • Because there is no length on the term of the loan, these loans can trap borrowers year-round
  • A short-term payday loan can be rolled over into a longer-term loan
  • After a borrower has paid off 30% of their longer-term loan, they can renew it indefinitely
  • Lenders could make loans to borrowers who already have a high-cost loan
  • Lenders have electronic access to a borrower’s account

For more information please contact Jessica AcMoody at 517-231-6139 or