But Senator Justin Wayne of Omaha argued that the proposal would allow installment lenders to prey on people without good credit records. He pointed out that no consumer had come to ask for the change. The only witness supporting the bill was OneMain Financial, a company offering installment loans.
Other critics include Senator Carol Blood of Bellevue, who called installment loans a “cash cow” for lenders and said bankruptcy filings reveal people are in trouble taking out multiple loans.
Senator Tony Vargas of Omaha said the legislature does not need to change state law to make a business profitable. He also said federal regulators have raised concerns that states do not adequately regulate installment loans.
He argued that lenders should be required to consider clients’ ability to repay loans, noting that many clients pay off one loan by taking out another, and the default rate increases with interest rates.
Lindstrom introduced a similar bill two years ago, but he fell victim to a filibuster ridden by former Senator Ernie Chambers of Omaha.
Meanwhile, Nebraska residents have voted overwhelmingly to put a 36% annual cap on payday loans, also known as cash advances. This is a type of short-term, high-cost loan on which the Nebraskans paid a fee equivalent to an average annual interest of 405% in 2019. They are different from the installment loans at issue in LB 510 .