On Monday, February 26, the Cranston City Council unanimously approved an ordinance to regulate short-term lenders, also known as “PayDay” lenders.  The ordinance was sponsored by City Councilman Robert Ferri (D), and co-sponsored by Council President Jessica Marino (D), and Councilman John Donegan (D).

The ordinance requires short-term lenders within Cranston to secure a license to issue short term loans, and limits those lenders to issue no more than 2 loans per customer per calendar year.  Currently and in the past, if the loan was not paid back within the relatively short term (typically 14 days), then the loan was automatically renewed and a new service charge was added.  These predatory fees drove up the cost of borrowing to customers dramatically, with many spiraling further into debt.  Under this ordinance, the maximum fee charge is now 10% of the original loan.  This ordinance assures that the maximum APR will now be 36% versus 260%.