Payday Lending Expansion Bill Passes in the Michigan House 

May 27, 2020

Contact: Jessica AcMoody
Policy Director, CEDAM
(517) 231-6139

Payday Lending Expansion Bill Passes in the Michigan House 

The proposed legislation could result in borrowers owing more than $4,000 on a $2,500 loan

LANSING— Today the Michigan House of Representatives approved House Bill 5097 with a vote of 58-49, which would authorize a new longer-term, high-interest loan product. The House Ways and Means Committee adopted the legislation without testimony earlier this morning. The proposed legislation would allow loans of up to $2,500 carrying fees equivalent to an APR of 132%. This means that on a one-year, $2,500 loan, a borrower would end up paying back more than $4,000. 

“We know these loans will trap Michigan residents in a cycle of debt and are harmful even when we are not facing a global health and economic crisis,” said CEDAM Policy Director Jessica AcMoody. “This bill was pushed through without any testimony heard. It’s frustrating that the more than 30 cards of opposition from organizations who see how these predatory loans affect their communities were not read in the committee hearing.”

Payday loans are marketed as a quick financial fix, but are instead a long-term debt trap for borrowers. In Michigan, 70% of borrowers take out a new loan on the same day they pay one off. One client of Habitat for Humanity found himself in a cycle of debt that lasted for two years that only ended when he was forced to close his bank account, ruining his credit. Access to a larger predatory loan would only exacerbate the problem for Michigan residents.

“These new loan products are nothing more than a way for lenders to evade the 25% rate cap in the Regulatory Loan Act,” said Sandra Pearson, Executive Director for Habitat for Humanity of Michigan. “Right now the Michigan legislature should work to ensure Michiganders can access their economic impact payments and get access to safe financial products—not subject them to further harm.” 

The bill will now be referred to the Senate. For more information about HB 5097, visit