LANSING, Mich. (WLNS) — Payday loan institutions around the state have created a predatory cycle according to lawmakers, so they’re taking steps to make a change.

Imagine you take out a small loan to help pay for a one-time need, but as interest piles up, you pay way more than you thought you ever would. That’s what lawmakers are looking to stop from happening by introducing a bill that would alter the way payday loaning works.

Payday loans offer people a money advance but with high interest. For reference, an average credit card APR falls around 20%. The average payday loan carries fees equivalent to an APR of 370%. Lawmakers say this rate is not acceptable.

“These are systems that were not designed for economic prosperity, it’s designed to keep people in debt,” state Sen. Sarah Anthony, D-Lansing, said.

Anthony on Wednesday introduced Senate Bill 632, which would cap that annual rate a 36%.

“We know that there’s still a need to take out smaller loans when life happens. but the reality is that we don’t want to create a system that people fall into more debt by taking out one of these quote-unquote ‘short-term loans,'” Anthony said.

She said payday lending institutions gear advertisements in specific communities.

“They target predominately Black and brown areas where there may be low-income individuals,” Anthony said.

The bill has bipartisan support and backing from multiple organizations, including the Community Economic Development Association of Michigan.

“We had a gentleman who was paying $150 every two weeks on $1,200 worth of loans for two years, and not touching the principal of his $1,200,” said Jessica AcMoody, policy director at Community Economic Development Association of Michigan.

Twenty states already have this law implemented, and lawmakers say passing this bill will help put money back into the state’s economy.

“Payday lenders drain millions of dollars in fees every year from our communities. And most of the stores are headquartered out of state, so it’s not just leaving the community, it’s leaving the state,” AcMoody said.

There is similar legislation being drafted in state House of Representatives.