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2023 - 2024 LEGISLATURE
2023 SENATE BILL 842
December 26, 2023 - Introduced by Senators JACQUE, CABRAL-GUEVARA and
SPREITZER, cosponsored by Representatives PENTERMAN, MADISON, SINICKI and
EMERSON. Referred to Committee on Financial Institutions and Sporting
Heritage.
***AUTHORS SUBJECT TO CHANGE***
AN ACT to renumber and amend 138.14 (10) (a) 1.; to amend 138.14 (13) (d)
and 422.201 (3); and to create 138.14 (10) (a) 1g. of the statutes; relating to:
interest rates on payday loans.
Analysis by the Legislative Reference Bureau
This bill limits the maximum interest rate that may be charged on a payday
loan.
Under current law, a person must be licensed by the Division of Banking 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.
The 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:
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SECTION 1 SENATE BILL 842
SECTION 1. 138.14 (10) (a) 1. of the statutes is renumbered 138.14 (10) (a) 1r.
and amended to read:
138.14 (10) (a) 1r. Except as provided in Subject to subd. 2. and sub. (12) (b),
this section imposes no limit on the interest that a licensee may not charge before the
maturity date of an annual percentage rate of interest greater than 36 percent on a
payday loan.
SECTION 2. 138.14 (10) (a) 1g. of the statutes is created to read:
138.14 (10) (a) 1g. For purposes of this paragraph, “annual percentage rate"
shall be determined consistent with the provisions of section 107 of the federal Truth
in Lending Act, 15 USC 1606, and federal Regulation Z adopted under that act, 12
CFR 226.
SECTION 3. 138.14 (13) (d) of the statutes is amended to read:
138.14 (13) (d) No payday loan, wherever made, for which a greater rate or
amount of interest than is allowed under sub. (10) (a) 2. has been contracted for or
received, may be enforced in this state, and every person in any way participating
therein in this state shall be subject to this section. If a licensee makes an excessive
charge of such interest as the result of an unintentional mistake, but upon demand
makes correction of such mistake, the loan shall be enforceable and treated as if no
violation occurred at the agreed rate. Nothing in this paragraph shall limit any
greater rights or remedies afforded in chs. 421 to 427 to a customer in a consumer
credit transaction.
SECTION 4. 422.201 (3) of the statutes is amended to read:
422.201 (3) For Notwithstanding sub. (2), for licensees under s. 138.09 or
138.14 or under ss. 218.0101 to 218.0163, the finance charge or rate of interest,
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SECTION 4
SENATE BILL 842
calculated according to those sections, may not exceed the maximums permitted in
ss. 138.09, 138.14, and 218.0101 to 218.0163, respectively.
SECTION 5.0Initial applicability.
(1) This act first applies to loans made, refinanced, or consolidated on the
effective date of this subsection.
SECTION 6.0Effective date.
(1) This act takes effect on the first day of the 3rd month beginning after
publication.
(END)
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