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Home > BizTimes Daily > Archives > October 2, 2009
League of Women Voters to testify for rate cap on payday loans
Published October 2, 2009 - BizTimes Daily
The League of Women Voters of Wisconsin Education Fund supports the approval of the Predatory Lending Consumer Protection Act (AB 392), which would cap interest rates on small dollar loans to 36 percent APR.
The League will testify in support of AB 392 at the Oct. 7 joint hearing of the Assembly Committees on Financial Institutions and Consumer Protection.
In a year-long study of payday lending in Milwaukee County in 2006 and 2007, the League found that interest and charges for the small loans were excessive. The League also found there were options at 13 to 16 percent APR from credit unions that met the need for small dollar amount loans and did so at a much more reasonable rate of interest.
Without the cap on interest rates, some people in Wisconsin are paying more than 300 percent APR interest, the League said. To make matters worse, such loans result in an estimated $168.6 million leaving the state's economy each year to enrich the out-of-state-owners of the payday lenders, the League said.
Some borrowers pay as much or more in interest as the original loan amount.
