Lawmakers in the State of Idaho are working on two different bills that will regulate payday lenders operating in Idaho. The bills take a hammer and stick approach to make sure that payday lenders in Idaho are licensed. Here's the hammer — loans issued to Idaho residents by payday lenders who are not licensed in Idaho will be invalid. That is, a borrower will be able to walk away from the loan agreement.
Another hammer included in the proposed legislation is a provision that would allow the Idaho Department of Finance to issue cease and desist orders and to sue unlicensed payday lenders.
Currently, payday lenders in Idaho are not heavily regulated. In order to operate in Idaho, payday lenders are currently required to have a payday lender's license. These lenders provide short-term loans with high interest rates and usually cater to lower-income borrowers. Borrowers typically agree to repay the loan with proceeds from their next paycheck (hence, these loans are often called "paycheck loans").
The House version of the bill would also require payday lenders to give consumers a list of credit and debt counseling services and would create an optional payment plan for borrowers who can't pay off the loan.
As of 2008, there were 239 licensed payday lenders in Idaho in 2008.
The most recent Department of Finance numbers show that in 2007, Idahoans took out 1.36 million payday loans, which totaled $389 million. Gee said the average Idaho payday loan is for $300.
You can read more about the payday loan legislation in Idaho here.