Payday Lending Bill Signed Into Law

June 18, 2021, 6:30 AM HST
* Updated June 18, 1:16 AM
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Predatory payday lending schemes will be phased out across Hawai´i.

HB 1192 HD1 SD2 CD1, now Act 56 after being signed by Gov. David Ige this week, phases out Hawaiʻi’s payday loans by the end of this year and replaces them with more regulated and licensed installment loans beginning in 2022. 

The installment loans enabled by this legislation will have lower interest rates and fees, more flexible repayment schedules, greater transparency for the consumer, and ultimately more accountability as they will be licensed and regulated by the Department of Commerce and Consumer Affairs, according to a release from the State House of Representatives.

“Phasing out payday loans and creating a more consumer friendly installment loan will be a dramatic improvement for about 20% of Honolulu’s population that relies on payday loans because they are underbanked or unbanked,” said Representative Aaron Ling Johanson (Chair, House Consumer Protection and Commerce Committee). “Installment loans are better for the consumer because borrowers are able to build credit and preserve their access to capital on much more favorable terms.”

Pew Charitable Trusts estimates that for the typical Hawai‘i payday loan of $300, a consumer ends up paying on average $529 over five months for that $300 loan.


“For too long, payday loans have trapped so many of our most financially vulnerable people in a cycle of debt that they cannot escape. This legislation not only corrects this serious injustice, but also and more importantly enables access to needed capital while providing a path to greater financial self-sufficiency and opportunity,” said Rep. Johanson.


To see all bills passed by the 2021 Legislature, click here.

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