Republicans and Democrats are coming together to put a cap on “outrageously high” payday loans in Wisconsin.
Reps. Scott Allen (R-Waukesh) and Amaad Rivera-Wagner (D-Green Bay) are joining with GOP Sen. Andre Jacque of New Franken to move forward with two bills in the state legislature that would put a place a cap on the annual percentage rate (APR) or interest rates on payday and installment loans while implementing new restrictions on short-term lending.
Wisconsin Public Radio reports that the bills followed the state Department of Financial Institutions’ finding that some lenders were charging up to 850% in interest. The lawmakers released a statement detailing the bills.
“LRB-2249 would transition payday loans to short-term loans with a payment plan whereupon both principal and interest are a part of each payment. Payday lenders would also have to disclose the amount of interest that will be paid over the course of the loan term and how much each payment would be. This would allow consumers to know the true cost of taking out a payday loan, leading to better financial decisions,” the lawmakers said.
They added, “LRB-4308 would require short-term installment lenders to report to DFI the average APR of their loans and the number of loans that were refinanced or resulted in a money judgement or vehicle repossession. This reporting would provide greater transparency in the industry.”
The bills would cap the APR for payday and installment loans at 36 percent. At least seventeen loan companies cap their maximum interest at 36%, WisBusiness reports. Lenders would also have to disclose payment plans and the interest rate over the duration of the loan. It would also limit loans to six months.
“Financial struggle does not belong to any political party or any one community, which is why this bipartisan fix matters,” explained Rep. Rivera-Wagner. (RELATED: GOP Warn of Water Contamination From Abortion Pills, Pushes ‘Catch Kit’ Mandate)
Rep. Allen continued, “Too many people get trapped in an endless cycle of debt after taking out short-term loans. These bills would remove the worst aspects while still leaving a viable business.”
Should the bill pass the Wisconsin Legislature, it would arrive on Democratic Governor Tony Evers’ desk to be signed. (RELATED: Evers Vetos Slew Of Legislation As Final 365 Days Closes In)
