2021 - 2022 LEGISLATURE
March 31, 2021 - Introduced by Representatives Allen, Cabral-Guevara,
Armstrong, Dallman, Hintz, Horlacher, Moses, Rozar, Thiesfeldt,
Spreitzer, Neubauer and Andraca, cosponsored by Senators Jacque,
Carpenter and Smith. Referred to Committee on Financial Institutions.
1An Act to renumber and amend
138.14 (10) (a) 1.; to amend
138.14 (13) (d) 2
and 422.201 (3); and to create
138.14 (10) (a) 1g. of the statutes; relating to:
3interest rates on payday loans.
Analysis by the Legislative Reference Bureau
This bill limits the maximum interest rate that may be charged on a payday
Under current law, a person must be licensed by the Division of Banking
(division) in the Department of Financial Institutions to originate or service a payday
loan involving a Wisconsin resident. Current law does not impose a limit on the
interest that a payday loan licensee may charge, before the maturity date, on a
payday loan. If a payday loan is not paid in full by the maturity date, current law
prohibits a licensee from charging interest after the maturity date in excess of 2.75
percent per month. A payday loan under which a greater rate of interest is charged
after the maturity date is not enforceable.
This bill limits the interest rate that a payday loan licensee may charge, before
the maturity date, on a payday loan to an annual percentage rate of 36 percent. A
payday loan on which a greater rate of interest is charged is not enforceable.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
138.14 (10) (a) 1. of the statutes is renumbered 138.14 (10) (a) 1r. 2
and amended to read:
(a) 1r. Except as provided in Subject to subd. 2. and
sub. (12) (b), 4this section imposes no limit on the interest that
a licensee may not
charge before the
5maturity date of an annual percentage rate of interest greater than 36 percent on
138.14 (10) (a) 1g. of the statutes is created to read:
(a) 1g. For purposes of this paragraph, “annual percentage rate" 9
shall be determined consistent with the provisions of section 107 of the federal Truth 10
in Lending Act, 15 USC 1606
, and federal Regulation Z adopted under that act, 12
138.14 (13) (d) of the statutes is amended to read:
(d) No payday loan, wherever made, for which a greater rate or 14
amount of interest than is allowed under sub. (10) (a) 2.
has been contracted for or 15
received, may be enforced in this state, and every person in any way participating 16
therein in this state shall be subject to this section. If a licensee makes an excessive 17
charge of such interest as the result of an unintentional mistake, but upon demand 18
makes correction of such mistake, the loan shall be enforceable and treated as if no 19
violation occurred at the agreed rate. Nothing in this paragraph shall limit any 20
greater rights or remedies afforded in chs. 421 to 427 to a customer in a consumer 21
422.201 (3) of the statutes is amended to read:
422.201 (3) For Notwithstanding sub. (2), for
licensees under s. 138.09 or 24
138.14 or under ss. 218.0101 to 218.0163, the finance charge or rate of interest
calculated according to those sections, may not exceed the maximums permitted in 2
ss. 138.09, 138.14, and 218.0101 to 218.0163, respectively.
(1) This act first applies to loans made, refinanced, or consolidated on the 5
effective date of this subsection.
This act takes effect on the first day of the 3rd month beginning after 8