Wisconsin Passes Payday Loan Laws

By: Javi Calderon
Wisconsin Payday Lenders Hope Republicans Relax Regulations

Payday loan lenders in the State of Wisconsin are hoping that a Republican Governor and Republican majority Legislature will mean more lax regulations on the payday loan industry.

The current governor of the state, Democrat Jim Doyle, recently passed a bill to restrict cash advance loans to a maximum of $1,500. The new rules are set to take effect on the 1st day of 2011. However, they may not last long.

The Wisconsin Deferred Deposit Association plans to pursue changes to the bill via a provision in the State’s budgeting process. For the time being, however, Governor-elect Scott Walker (a Republican) holds the position that the tightened restrictions were necessary.

Though Republicans are typically more lenient on payday lenders, various Republican members of the Wisconsin State Legislature have stated that they are vehemently opposed to payday loans.

The new law not only caps the maximum at $1,500 (or 35% of the borrower’s monthly income, whichever is less) but it also limits the amount of loan rollovers to one. Consumers who rollover their loans repeatedly are the ones who get slammed with high interest rates and find it difficult to climb out of debt.

The loan also includes zoning laws that bar lenders from being within 150 feet of a residential area, and 1,500 feet from one another.

Finally, loan lenders are prohibited from offering loans that are secured with the borrower’s vehicle as collateral. Late or missed payment can result in the borrower losing their car, thus making their financial situation even more difficult.

State records show that in 2009 there were a total of 527 consumer loan lenders in the State of Wisconsin who lent more than $600 million dollars. Before Governor Doyle passed the new law, Wisconsin was the only state in the country that had absolutely no laws on the books regulating short term loans.