Payday loans in Wisconsin have declined significantly since 2010, when former Gov. Jim Doyle signed into law legislation intended to limit predatory lending. In 2010, 460 lenders provided over 1.15 million loans worth $482 million; but by the next year, the number of lenders dropped to 423 and the number of total loans fell to 255,117 with an aggregate value of $76.6 million. Experts say, however, that the data only shows how easily payday loan operators exploit legal loopholes.
One loophole changed the definition of “payday loan” to include only those made for a period of fewer than 90 days. This means that many high-interest loans fall outside of the law signed by Doyle. The original law also limited the number of payday loans offered to a customer and capped the amounts at either $1,500 or 35 percent of the customer’s gross monthly income. It did not include an interest-rate cap on the original loan but did impose a ceiling of 2.75 percent on interest charged on the amount a customer has not paid by the time the loan is due.
State Rep. Gordon Hintz (D-Oshkosh) says payday lenders now largely use longer-term installment loans, which leaves them free to issue costly loans and encourage customers to “roll over” the loans and borrow more money to settle outstanding debt. Hundreds of other lenders, however, are subject to the new definition of payday loans and the restrictions that come with it.