But Omaha Senator Justin Wayne argued that the proposal would allow installment lenders to exploit people without good credit. He pointed out that no consumers had come to request the change. The only witness who supported the law was OneMain Financial, a company that offers installment loans.
Other critics included Senator Carol Blood of Bellevue, who called installment loans “cash cows” for lenders, saying that bankruptcy filings show that people get into trouble when they take out multiple loans.
Omaha Senator Tony Vargas said the legislature doesn’t have to change state laws to make a business profitable. He also said federal regulators have raised concerns that states are not adequately regulating installment loans.
He argued that lenders should be required to consider customers’ ability to repay the loans, noting that many customers pay off one loan by borrowing another and that the default rate increases with interest rates.
Lindstrom introduced a similar law two years ago, but it fell victim to a filibuster assembled by former Omaha Senator Ernie Chambers.
Meanwhile, Nebraskans overwhelmingly voted for a 36% annual limit on payday loans, also known as cash advances. This is a type of short-term, costly borrowing for which Nebraskans paid fees averaging 405% annual interest in 2019. They differ from the installment loans in question in LB 510.