WASHINGTON, D.C. – Amid a national conversation on limiting interest rates, the Center for Responsible Lending (CRL) applauds U.S. Senator Jack Reed (D-R.I.) for introducing the Predatory Lending Elimination Act (S. 3793), legislation to create a strong, permanent cap of 36% annual percentage rate (APR), including fees, on consumer credit – covering credit cards as well as installment, car-title, and payday loans. The bill would extend the rate cap that protects active-duty military servicemembers so that it covers everyone in America.
“This legislation would stop predatory lenders from fleecing families who are already overburdened by the high cost of essentials like food and housing,” said Nadine Chabrier, senior policy counsel at CRL. “The Predatory Lending Elimination Act would prevent lenders from charging extremely high prices through hidden junk fees or evasion of state laws. Congress should pass this bill to ensure every American has a baseline level of protection from exploitative credit.”
The Predatory Lending Elimination Act covers all types of lenders, including banks, and would eliminate predatory payday loans, auto-title loans, and similarly harmful, high-cost credit across the nation by:
- Closing loopholes and preventing hidden junk fees.
- Simplifying compliance by adopting a standard that lenders already understand and use: the rate cap for servicemembers that was established by the Military Lending Act, a bipartisan law enacted in 2006.
- Stopping lenders from using “rent-a-bank” schemes to charge triple-digit APRs.
- Upholding the ability of states to adopt stronger protections as needed, such as lower rates for larger loans.
- Establishing a simple, common-sense limit that has broad, bipartisan support from the public. State ballot measures to institute strong caps have received backing from across the political spectrum. For example, a measure in Nebraska recently passed with support from 80% of voters.
The Predatory Lending Elimination Act does not apply to residential mortgages, car purchase loans, or loans by federal credit unions. Federal credit unions are already subject to an 18% interest rate cap for most loans and a 28% cap for payday alternative loans.
A coalition of over 170 groups – including civil rights, consumer, faith, and labor groups – today sent a letter in support of the Predatory Lending Elimination Act to the Senate Banking Committee.
Background
Interest rate limits, also known as usury laws, date back thousands of years and have been implemented around the world. Nearly all states and the District of Columbia currently cap rates for at least some consumer installment loans, depending on the size of the loan, and twenty-one states and D.C. prohibit high-cost, short-term payday loans.
Recent CRL reports related to capping interest rates:
- On a lender evading state usury laws – “Lost Opportunities: How OppFi Traps Borrowers in Unaffordable Debt” (2026)
- “Escape from the Debt Trap: Relief for Minnesotans After State Ends Payday Lending” (2026)
- “Buried In Debt: High-Cost Credit Products Harm Working Coloradans” (2025)
- “Down the Drain: Payday Lenders Take $2.4 Billion in Fees from Borrowers in One Year” (2025)
- “Under the Radar: Evidence of Prohibited Vehicle-Title Loans Made in 22 States and DC” (2025)
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Press Contact: Matthew Kravitz matthew.kravitz@responsiblelending.org