EC Wisconsin News

State Senator Andre Jacque (R-WI) is spearheading bipartisan efforts in Wisconsin, introducing a bill aimed at reforming payday loans by suggesting a 36 percent cap on interest rates. The initiative seeks to address issues related to debt cycles and strives to offer better lending alternatives for borrowers subjected to high rates in the state.

According to Wisconsin Public Broadcasting, Jacque said: "I really am not finding individuals who have gone to payday lenders and that has been something that helped them out of a horrible situation. It's really something that has only put them into a deeper hole."

Jacque referenced the Military Lending Act as the foundation for proposing a 36 percent interest rate cap, an action intended to shield active servicemembers from predatory lending. As reported by the Center for Responsible Lending, this initiative, which was introduced in previous sessions, aligns with measures adopted by 20 states and the District of Columbia. Rabbi Bonnie Margulis, Executive Director of Wisconsin Faith Voices for Justice, and Barbara Sella, Executive Director of the Wisconsin Catholic Conference, expressed support for reforms targeting predatory lending practices.

The Wisconsin Department of Financial Institutions highlights that payday loans are high-cost by nature, with an average Annual Percentage Rate (APR) in 2022 standing at 863.92%. Data disclosed by licensed Wisconsin payday lenders indicate that 17.92% of borrowers defaulted on their loans, 23.88% encountered payment method dishonor or denial due to insufficient funds, while 3.46% resulted in repayment plans.

Seehafer News reports that under Jacque's bill, if a payday lender exceeds the proposed 36 percent interest cap, the loan would be deemed unenforceable. This could potentially render it invalid or uncollectible due to violation of the interest rate limitation outlined in the legislation.