Bipartisan state bills would cap interest on payday loans, increase regulation

Bipartisan lawmakers in Wisconsin have introduced two state bills that would cap interest rates on payday and installment loans at 36% APR and add new consumer protections for short‑term lending. The proposals aim to curb what sponsors describe as “predatory” high‑cost loans that can reach effective rates of hundreds of percent while still allowing a regulated short‑term credit market to operate.​

Where this is happening

The bills are being circulated in the Wisconsin Legislature by Sen. André Jacque (R–New Franken) and Reps. Scott Allen (R–Waukesha) and Amaad Rivera‑Wagner (D–Green Bay), reflecting support from both Republican and Democratic lawmakers. Sponsors say they hope the measures reach Gov. Tony Evers’ desk and note that many other states already have stricter rules on payday lending.​

Key interest rate cap

Both bills would set a maximum annual percentage rate of 36% on payday and installment loans, aligning Wisconsin with the federal cap that already applies to many short‑term loans made to active‑duty servicemembers and veterans. Supporters argue that if rates above 36% are considered harmful for veterans, they are also harmful for the general public, especially when some current payday products in Wisconsin carry APRs reported as high as about 850%.​

Other major restrictions

One bill would tighten the basic structure of payday loans by limiting their term to between 90 days and six months, requiring equal payments over the life of the loan and mandating that each payment reduce principal so borrowers steadily pay down debt instead of repeatedly rolling it over. Lenders would also have to use a “reasonable underwriting process” to verify a borrower’s ability to repay and could not extend loans beyond what the borrower can afford under that review.​

Transparency and reporting rules

The legislation would require licensed installment and payday lenders to report data such as their average APRs, how many loans are refinanced, and how many end in money judgments or vehicle repossessions, which lawmakers say will improve transparency in the short‑term lending market. Lenders would also need to clearly disclose the total interest a borrower will pay over the life of the loan, the amount of each payment, and inform customers about state‑supported financial literacy courses.​

Stated goals and context

Sponsors say the goal is to eliminate predatory lending practices and “debt trap” products, not to ban short‑term credit altogether, and they argue that new guardrails can still allow lenders to make a profit while steering borrowers toward more sustainable options. They also point out that a 36% rate cap has been adopted in several other states over the past decade and is broadly popular with voters across party lines, suggesting political momentum for these kinds of reforms.​