Wisconsin short term loan legislation not air tight

Former Wisconsin governor Jim Doyle attempted to put an end to predatory short term lending this past January by passing Wisconsin Act 405, the Fond du Lac Reporter notes. In a letter to state senators, Doyle wrote that the bill protects consumers from the "debt cycle of repetitive rollover loans, excessive interest charges and predatory lending practices of the short term lending industry." Specifically, it capped the maximum loan amount at $1,500, or 35 percent of a customer's gross monthly income. It also restricted rollovers, created a monthly interest rate cap of 2.75 percent on outstanding balances, prevented multiple loans at one time, prohibited lender stores from being located within 1,500 feet of each other and allowed for repayment in four equal installments that coincide with pay schedules. However, specific language in the bill condemned "licensed lenders" from making auto title loans. This loophole allowed unlicensed lenders to take advantage of what Doyle noted is one of the "worst predatory lending practices," since cars are an "asset that's essential to the well-being of working families." Furthermore, a recent Joint Finance Committee meeting may reduce licensed auto title lender restrictions, increasing risk even more. The news source notes in a separate article that there are more than 450 short term lenders in the state, according to the Wisconsin Department of Financial Institutions.