Advocates for capping annual interest rates for payday loans in Hawaii — which are now as high as 459 percent — will likely have to try again next year for legislative help.

Rep. Roy Takumi, the new chair of the committee dealing with consumer protection, has deferred a bill that sought to cap rates at 36 percent annually.

Senate Bill 286 sought to prevent consumers who turn to stores like Money Mart for short-term loans from getting caught in a cycle of debt.

Money Mart 1734 Kalakaua Ave payday loans. 14 march 2017

Dollar Financial, the Philadelphia-based company that owns Money Mart (pictured here at 1734 Kalakaua Ave) spent thousands of dollars to lobby against capping the interest rate.

Cory Lum/Civil Beat

Consumer protection groups view the current practice as predatory while the payday lending industry says the bill would put them out of business.

“When I walked into the Consumer Protection and Commerce Committee, my guiding principle was that if I didn’t fully understand the bill or if it cries out for a more complex solution, I will defer,” Takumi said.

The representative said he worried passing the bill out of the committee would be an “exercise in futility” because it would have gone next to the House Finance Committee. Chairwoman Sylvia Luke removed the interest rate cap on a similar bill two years ago.

But he also promised that it’s an issue that he’ll work on during the second half of this year in preparation for next session. He wants to craft a proposal that won’t hurt businesses or result in unintended consequences.

Hawaii created the payday lending industry in 1999 by exempting businesses giving short-term loans from the state usury law. But while the industry serves thousands of customers who need short-term credit, national studies show it’s common for consumers to roll over or renew loans for several months.

Hawaii residents have gotten stuck in cycles of debt with service providers saying the bill has contributed to homelessness. Sen. Rosalyn Baker introduced SB 286 in the hopes that Hawaii would join more than a dozen other states that have cracked down on the industry.

Takumi noted the bill isn’t entirely dead and will be re-considered next year.

“I am committed to doing something about this issue because I do think that it’s a real problem,” he said. “I felt it was prudent to take a step back.”

Click here to read Civil Beat’s previous reporting on this issue.

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