| 1 | 1 | | LRB-0030/1 |
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| 2 | 2 | | ARG:emw |
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| 3 | 3 | | 2023 - 2024 LEGISLATURE |
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| 4 | 4 | | 2023 SENATE BILL 842 |
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| 5 | 5 | | December 26, 2023 - Introduced by Senators JACQUE, CABRAL-GUEVARA and |
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| 6 | 6 | | SPREITZER, cosponsored by Representatives PENTERMAN, MADISON, SINICKI and |
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| 7 | 7 | | EMERSON. Referred to Committee on Financial Institutions and Sporting |
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| 8 | 8 | | Heritage. |
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| 9 | 9 | | ***AUTHORS SUBJECT TO CHANGE*** |
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| 10 | 10 | | AN ACT to renumber and amend 138.14 (10) (a) 1.; to amend 138.14 (13) (d) |
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| 11 | 11 | | and 422.201 (3); and to create 138.14 (10) (a) 1g. of the statutes; relating to: |
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| 12 | 12 | | interest rates on payday loans. |
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| 13 | 13 | | Analysis by the Legislative Reference Bureau |
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| 14 | 14 | | This bill limits the maximum interest rate that may be charged on a payday |
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| 15 | 15 | | loan. |
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| 16 | 16 | | Under current law, a person must be licensed by the Division of Banking in the |
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| 17 | 17 | | Department of Financial Institutions to originate or service a payday loan involving |
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| 18 | 18 | | a Wisconsin resident. Current law does not impose a limit on the interest that a |
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| 19 | 19 | | payday loan licensee may charge, before the maturity date, on a payday loan. If a |
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| 20 | 20 | | payday loan is not paid in full by the maturity date, current law prohibits a licensee |
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| 21 | 21 | | from charging interest after the maturity date in excess of 2.75 percent per month. |
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| 22 | 22 | | A payday loan under which a greater rate of interest is charged after the maturity |
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| 23 | 23 | | date is not enforceable. |
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| 24 | 24 | | The bill limits the interest rate that a payday loan licensee may charge, before |
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| 25 | 25 | | the maturity date, on a payday loan to an annual percentage rate of 36 percent. A |
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| 26 | 26 | | payday loan on which a greater rate of interest is charged is not enforceable. |
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| 27 | 27 | | The people of the state of Wisconsin, represented in senate and assembly, do |
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| 28 | 28 | | enact as follows: |
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| 31 | 31 | | 3 - 2 -2023 - 2024 Legislature LRB-0030/1 |
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| 32 | 32 | | ARG:emw |
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| 33 | 33 | | SECTION 1 SENATE BILL 842 |
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| 34 | 34 | | SECTION 1. 138.14 (10) (a) 1. of the statutes is renumbered 138.14 (10) (a) 1r. |
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| 35 | 35 | | and amended to read: |
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| 36 | 36 | | 138.14 (10) (a) 1r. Except as provided in Subject to subd. 2. and sub. (12) (b), |
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| 37 | 37 | | this section imposes no limit on the interest that a licensee may not charge before the |
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| 38 | 38 | | maturity date of an annual percentage rate of interest greater than 36 percent on a |
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| 39 | 39 | | payday loan. |
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| 40 | 40 | | SECTION 2. 138.14 (10) (a) 1g. of the statutes is created to read: |
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| 41 | 41 | | 138.14 (10) (a) 1g. For purposes of this paragraph, “annual percentage rate" |
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| 42 | 42 | | shall be determined consistent with the provisions of section 107 of the federal Truth |
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| 43 | 43 | | in Lending Act, 15 USC 1606, and federal Regulation Z adopted under that act, 12 |
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| 44 | 44 | | CFR 226. |
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| 45 | 45 | | SECTION 3. 138.14 (13) (d) of the statutes is amended to read: |
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| 46 | 46 | | 138.14 (13) (d) No payday loan, wherever made, for which a greater rate or |
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| 47 | 47 | | amount of interest than is allowed under sub. (10) (a) 2. has been contracted for or |
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| 48 | 48 | | received, may be enforced in this state, and every person in any way participating |
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| 49 | 49 | | therein in this state shall be subject to this section. If a licensee makes an excessive |
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| 50 | 50 | | charge of such interest as the result of an unintentional mistake, but upon demand |
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| 51 | 51 | | makes correction of such mistake, the loan shall be enforceable and treated as if no |
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| 52 | 52 | | violation occurred at the agreed rate. Nothing in this paragraph shall limit any |
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| 53 | 53 | | greater rights or remedies afforded in chs. 421 to 427 to a customer in a consumer |
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| 54 | 54 | | credit transaction. |
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| 55 | 55 | | SECTION 4. 422.201 (3) of the statutes is amended to read: |
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| 56 | 56 | | 422.201 (3) For Notwithstanding sub. (2), for licensees under s. 138.09 or |
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| 57 | 57 | | 138.14 or under ss. 218.0101 to 218.0163, the finance charge or rate of interest, |
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| 81 | 81 | | 24 - 3 -2023 - 2024 Legislature |
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| 82 | 82 | | LRB-0030/1 |
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| 83 | 83 | | ARG:emw |
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| 84 | 84 | | SECTION 4 |
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| 85 | 85 | | SENATE BILL 842 |
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| 86 | 86 | | calculated according to those sections, may not exceed the maximums permitted in |
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| 87 | 87 | | ss. 138.09, 138.14, and 218.0101 to 218.0163, respectively. |
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| 88 | 88 | | SECTION 5.0Initial applicability. |
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| 89 | 89 | | (1) This act first applies to loans made, refinanced, or consolidated on the |
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| 90 | 90 | | effective date of this subsection. |
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| 91 | 91 | | SECTION 6.0Effective date. |
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| 92 | 92 | | (1) This act takes effect on the first day of the 3rd month beginning after |
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| 93 | 93 | | publication. |
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| 94 | 94 | | (END) |
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