Some new consumer protections from predatory lenders in Wisconsin

Wisconsin payday loans average $300 with 515% in annual interest 

They’re sometimes referred to as predatory lenders.

In Wisconsin, a new law is going to offer some protection to those who need quick cash by going through these payday lenders.

Peter Skopec, director the Wisconsin Public Interest Research Group (WISPIRG), says one rule from the Consumer Financial Protection Bureau will have a significant impact.

“(Payday lenders) will have to make sure a potential borrower can repay their loan and afford regular living expenses before making that loan,” Skopec said. “This gets at the core of the predatory loan business model.”

Critics of the payday lenders say the quick cash they get vulnerable people leave them in major debt.

“In Wisconsin the average payday loan is about $300 and it comes with 515 percent annual interest,” Skopec points out. “Payday lenders target people in vulnerable position and then make them even worse off.”

And, while there are some new protections, they don’t help with everything.

“What the new protections don’t cover are so-called installment loans,” Skopec said. “Installment loans have astronomical interest rates, as well, but their repaid more gradually.

“Wisconsin installment loans are far less regulated than payday loans so they’ve become more popular with predatory lenders in recent years.”

Payday lenders reportedly operate a $39 million per year industry.