The South Carolina legislature is embroiled in a struggle to determine the fate of the Palmetto State’s loan industry. Proponents of a 36-percent rate cap on payday and installment loans are pushing for the measure to be enacted, while lobbyists from the lending industry are fiercely opposing it.
At the center of the debate is the question of whether a rate cap is necessary to protect South Carolina’s citizens from predatory lending practices. Supporters of the measure argue that it is an essential safeguard to guard against usurious lending practices that can plunge already financially-challenged borrowers into a cycle of debt. They point to the fact that the average annual percentage rate (APR) for installment loans in South Carolina is currently 277 percent, a figure that is among the highest in the nation.
The lending industry, however, is fighting the measure, arguing that a rate cap would reduce competition and make it harder for borrowers to access the credit they need. They contend that lenders would be forced to pass on the costs of the rate cap to consumers, resulting in higher interest rates and fewer loan options.
The fight has been heating up in recent weeks. Consumer advocacy groups have launched a grassroots campaign to pressure legislators to pass the rate cap, while the lending industry has been busy hiring more lobbyists and pouring money into political action committees (PACs) in an effort to sway lawmakers to their side.
As the battle continues, South Carolina residents can only hope that their legislators will take the necessary steps to protect them from predatory lending practices. In the meantime, the fight for a 36-percent rate cap in South Carolina rages on.