California advances bill to cap consumer loan interest rates

SACRAMENTO (AP) — The California Senate has advanced legislation to cap interest rates for consumer loans.

The bill caps interest rates for payday and other loans at roughly 38 percent. The cap will fluctuate slightly depending on a key interest rate set by the Federal Reserve. It affects loans between $2,500 and $9,999.

Consumer advocacy groups say some loan companies charge interest rates as high as 225%. They say the proposal is aimed at stopping predatory lending practices.

But opponents of the bill, including chambers of commerce representing black and Hispanic Californians, say the rate cap could cut some people's access to loans.

Loan companies would also be required to offer the borrower a credit education seminar.

It will receive a final vote in the state Assembly later Friday.