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by Philip Burgess
Short term loans can sometimes provide a valid option for people in need of a short term lending option. It can offer an individual fast cash in exchange for their next paycheck to cover emergencies and other unforeseen expenses. While many believe this is just a quick fix to a larger, more worrisome problem, they can be extremely helpful for those who need a little extra help now and then. Lenders in Delaware may be greatly affected depending on an upcoming vote on the proposed House Bill 289, which would limit the amount of short-term loans a Delaware citizen can take out per year to five. The legislation also suggests a change in the definition of such an advance, now including loans of up to $1,000, whereas before only sums of $500 or less were considered. According to the News Journal, lawmakers are pursuing this avenue to force people in Delaware to become more responsible about their personal finances. The hope is that those who commonly rely on such loans will seek out help concerning money management skills. Should HB 289 pass through both the Delaware House of Representatives and the Senate and be signed into law, a database will be created to track how many short-term loans citizens of Delaware have taken out over a 12 month period. Section 3, Part A of the bill reads that the database will also include information on whether the individual seeking an advance has an outstanding account with another lender, is actually eligible to receive loans and all other information deemed necessary to comply with transactions. Section 3, Part B of HB 289 sets guidelines that database creators and those with access to it would have to follow to ensure security compliance and provide against identity theft risks and technical difficulties. The News Journal reported this may affect a large volume of individuals and companies. According to the source, approximately 60 percent of short term loans are taken out by people who borrow 12 or more times per year. Delaware is among 14 states that does not have any laws in place to regulate the short term loan industry. The source also reported that it is common for banks and other traditional lenders to have limitations on the amount of money an individual can borrow per year. According to the Associated Press, the proposed regulations for the high interest loans are set to be voted on by members of the House of Representatives on May 1.