Joint Statement: Installment loan bill needs improvement to protect Oklahomans from financial harm

For Immediate Release

Oklahoma Policy Institute along with a coalition of Oklahoma organizations and individuals released this joint statement on a bill that would allow a new high-cost lending product in Oklahoma:

Last month, the Oklahoma Senate passed a bill, SB 720, to create a new installment loan product in Oklahoma. While this bill is an improvement over HB 1913, which passed the Legislature and was vetoed by Governor Fallin in 2017, there are still items of concern that must be addressed in order to protect struggling Oklahomans from the very real financial harms that could result from this bill as currently written.

The repeal of payday loans in Oklahoma contained in SB 720 is an important and positive step. However,  the installment loans that would take their place could also be very harmful to Oklahoma borrowers if the bill does not provide stronger consumer protections.

  • SB 720 allows an annual interest rate of 204 percent. That means a loan of $1,500 (the maximum amount allowed) would carry cumulative interest of $2,108. This interest rate is unacceptably high and will mean that many borrowers, who are already struggling financially, will find it difficult, if not impossible, to make their payments. This maximum allowed interest should be amended to make these new loans comparable to the signature “B” loans that are already available. A 12-month “B” loan for $1,500 carries cumulative interest and fees of only $456 and an annual interest rate of 52 percent.
  • SB 720 does not require lenders to make sure borrowers can afford their loan payments before extending credit.  It only states that loan payments cannot exceed 20 percent of the borrower’s gross monthly income. That means that a borrower needs to have gross income (not take-home pay) of $18,000 a year to take out the maximum loan amount ($1,500) that comes with a monthly payment of $300. This ability to repay standard should be based on take-home pay and should take into account other necessary monthly expenses.
  • SB 720 does not prohibit wage garnishment. The bill simply says this cannot be required.  But lenders can still ask, and employers can comply. Wage garnishment should be clearly prohibited.
  • SB 720 allows borrowers to be declared in default as soon as one day after the first missed payment. The bill places no minimum number of days on this time frame — only a maximum period of 60 days is stated. Sixty days should be clearly stated as the minimum number of days that must pass before a borrower can be declared in default.
  • SB 720 preempts local governments from regulating installment loans, even if that is what’s best for the local community. This means that local governments will be restricted in their ability to adequately serve the needs of their own communities. This preemption provision should be removed from the bill.

If the goal of SB 720 is to create a responsible and accessible product for those Oklahomans who may not have access to traditional credit, then it falls short of the mark in its current form. We encourage the Oklahoma House of Representatives to make the changes necessary to protect hard-working Oklahomans from the costly and dangerous long-term debt trap that could result from SB 720 as currently written.


Catholic Conference of Oklahoma
Homeless Alliance
Humphreys Wallace Humphreys, PC
Kaleidoscope Behavior Solutions, LLC
Oklahoma Chapter of the National Association of Social Workers
Oklahoma Conference of Churches
Oklahoma Policy Institute
Oklahoma Women’s Coalition


Cindy Logsdon (Shawnee), CFO of a Native CDFI
Christy Mead (McAlester), LCSW
Rev. Chris Moore (Tulsa), pastor
Tina Pollard (Shawnee), loan officer and financial counselor
Reynada Wall (McAlester), social worker

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Oklahoma Policy Insititute (OK Policy) advances equitable and fiscally responsible policies that expand opportunity for all Oklahomans through non-partisan research, analysis, and advocacy.

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