CLUE Guide to the Safe Consumer Lending Act (AB 1109)

What is AB-1109?

AB 1109 would cap the annual percentage rate (APR) for all high-dollar consumer loans between $2,500 and $10,000 at 24 percent, plus origination fee (Kalra, 2017). There is currently no cap on either mid-dollar and high-dollar loans, meaning families are exploited by exponentially high rates. This type of exploitation can lead to “damaged credit, repossession of vehicles, closure of bank accounts, lawsuits, wage garnishment, and even bankruptcy” (Kalra, 2017). Latino and African American neighborhoods are targeted higher by this type of financial abuse, especially communities in which fall under low SES.  

Rev. David Farley explains why CLUE believes in AB-1109: “As people of faith from diverse traditions, we stand united against business practices and financial products that violate our shared values. The exploitative design of predatory lending is unacceptable to the just and peaceable society our traditions guide us to create.  All of our sacred scriptures speak out strongly against heaping excess debt upon the poor.  We believe it is immoral and contrary to the Divine call for love of neighbor, justice for the oppressed, and care of the most vulnerable.”


What will happen when it becomes law?

According to Kalra (2017), “by capping high-dollar loans between $2,500 and $10,000, California can take a necessary step of implementing sound financial protections for consumers who need a loan when faced with stressful financial circumstances.” It will ensure that lenders are providing safe and affordable loans.

Additionally, AB-1109 will counteract the current Federal legislative decisions to roll back current consumer protection regulations on loans which occur high interest.


What is the current standing of this act?

As of April 18th, AB-1109 remains in the Banking Committee of the CA Assembly after its scheduled vote on the 17th was postponed. The vote has been rescheduled for this coming Monday, April 24, 2017.


What can we do to support it?

  1. Call or email four key assemblymembers of the Banking Committee and ask them to vote “YES” on AB-1109. Explain the importance of this bill for your own community and how their constituents will directly benefit from this bill during your call/letter. Click here for contact information for the four assemblymembers, as well as a legislative calling script.

  2. Educate others on AB-1109 and encourage them to take action through calling their legislatures. Click here for a quick fact sheet on the bill. Click here for a guide on how to respond to predatory loans (this can be helpful for communities currently targeted by this).


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