Update on Payday Lending in State Senate

Posted by Amy on Thursday, 8 April 2010

A committee of the State Senate has adopted legislation to reform the practice of payday lending in Wisconsin. Payday loans are short term, high interest cash advances intended to provide consumers with money to cover emergency costs. Instead of meeting immediate needs, many clients of payday lenders find themselves quickly drawn into a never ending cycle of debt and poverty.

The Senate bill is a good first step toward reform of the payday lending industry, however Senate Bill 530 does not include many of the strong provisions included in the legislation adopted by the Assembly in February.

The Senate bill does not impose a cap on the interest rate charged for loans, nor does it ban auto title loans. The legislation does limit a consumer to one rollover per loan. If a consumer is unable to repay a loan, the legislation allows them to repay the outstanding balance over four pay cycles with a rate cap of 33% APR. The Senate bill also establishes an income test that would limit a consumer from borrowing no more than 35% of their monthly income. Finally, the Senate proposal provides the Wisconsin Department of Financial Institutions with badly needed regulatory powers.

The Wisconsin State Senate is scheduled to vote on SB 530 Tuesday April 13th. Now is the time to contact your state senator and urge their support for passage of a strong payday lending reform bill. If the Senate adopts SB 530, the bill will be sent to a conference committee to reconcile the differences between the Assembly and Senate proposals.

Together with the support of Lutheran Christians across Wisconsin, we can ensure passage of strong reform that will bring justice to our neighbors trapped in a cycle of debt and poverty.