POCATELLO, Idaho - State senator Lee Heider of Twin Falls said he decided to take on payday lending regulation when one of his own employees struggled after taking on some debt.
His plan would cap interest rates at 36 percent.
Nancy Savage has lived in Pocatello all her life and owns a small shop on Chubbuck road where she is a payday lender.
She said she treats her clients fairly and that payday lending is a needed service.
"All of us run into a problem every now and then where you need a little extra boost in your income," Savage said.
Mark Dahlquist with Pocatello Neighborhood Housing Services said he often sees people who lose their dream of owning a home because they're trapped in a cycle of pay day loans.
"It's not uncommon to see, if you were to take this interest rates at an annual basis, for it to be 500 percent or more. So I think step number one is to control the interest and fee structure," Dahlquist said.
Savage said on a yearly basis, the current rates may seem extreme, but that these loans are often for just a week or two and help people who can't get a loan anywhere else.
"So therefore you charge a little bit more for it, but $100 with us for a week is just $9.31. So if you look at it in that aspect it's not that expensive," Savage said.
Other states have passed similar laws, including a 36 percent cap, but Dahlquist said going from almost no regulation yo the proposed rules could be a tough sell.
"Although I don't have a problem with the 36 percent, I wonder with the makeup of our legislature if they're going to move to that extreme so quickly," Dahlquist said.
The state legislature has considered pay day lending regulations before. Last year, representative Elaine Smith of Pocatello introduced a bill that never made it out of committee.