Wisconsin Payday Loan Law and Legislation
In Wisconsin payday lending is legal.
The state sets no limit to either the amount of a payday loan or its interest. However, a total amount of outstanding loans should not exceed $1,500 or 35% of the customer’s gross monthly income, whichever is less. 2 renewals are allowed, there is no limit to the number of loans but for the condition of a 24-hour cooling-off period between them. NSF fee should not exceed $15 in the state; criminal actions are prohibited.
Actually, in many states, payday loan services are rigidly regulated. Wisconsin is one of the states where laws are less severe and allow a great deal of freedom for lenders. To a certain extent, payday lenders can charge here as much interest as they want. Historically, Wisconsin was the last to introduce any regulations to the industry, and it is not in a hurry to make payday loans more restrictive.
Wisconsin Payday Lending Statutes
Payday loans in Wisconsin are regulated by Wis. Stat. 138.14.
In order to operate in the state payday lenders are required to have a license where loans are initiated or services are rendered. The license is required for any type of business, be it in-store or online.
More restrictive laws governing the terms of payday loan system in Wisconsin, however, are still to come, but the government of the state has several guidelines regarding the information provided to people who apply for payday loans in Wisconsin.
- The 1st regulation (according to the Truth-in-Lending Act)is that the lenders who offer payday loans in the state should disclose that payday loans are short-termed and cannot provide long term stability. Lenders should also disclose that an additional percentage may be charged for refinancing payday loans and also that failure to repay the loan in the due period can lead to long term hardship.
- The 2nd requirement on payday loans in Wisconsin is that the Department of Finance should give educational information outlining the dangers of payday loans refinancing. Payday loan institutions in Wisconsin should give customers the necessary information to make informed decisions. This is to ensure that the lenders functioning in the state supply the customers with the information that might help people to choose what is better for their families
- And the 3d, payday loan companies should supply borrowers with a chart that discloses all the charges and fees attributed to the payday loan. The chart ought to be visible to every customer and is to be worded in a way everybody can understand the payday loan terms. Payday lenders operating in Wisconsin should use the charts to explain in detail financial loan workings.
Loan Amount in Wisconsin
- Small cash short-term loan amount should not exceed 35% of gross monthly income or $1,500 plus fees, the lesser of which applies.
Rates, Fees and Other Charges in Wisconsin
Except as provided in sub. (12) (b), there is no limit to the interest rate that is permitted to be charged, so long as it is imposed prior to the loan’s maturity date. (138.14(10)(a)1.)
Also, If and when a payday loan has not been repaid in full before the loan’s maturity date, a licensed lender is permitted to charge an interest rate no greater than 2.75% for each month, with the exception of licensed lenders who have made subsequent loans to the borrower. (138.14(10)(a)2.)
Real APR for payday loans in Wisconsin can reach 574 %.
The Maximum Term for a Payday Loan in Wisconsin
- A payday loan should not be given for a period of more than 90 days.
- It is allowed to make 2 renewals of a loan.
- However, there are no limits to the number of loans a person can take with the condition there should be a
24-hour cooling-off period after paying renewed loans.
Consumer Information
Attention
From July 2020, lenders are not required to check a borrower’s ability to repay a loan.
Be careful, evaluate your financial situation, don’t get into a debt trap.
The rule was changed by the CFPB.
- NSF fee should not exceed $15.
- Any criminal actions are prohibited in the state of Wisconsin.
Wisconsin Department of Finance accepts inquiries and complaints about payday loans in the state.
Regulator: Complaints & Information
Wisconsin Department of Financial Institutions
Mailing Address: Department of Financial Institutions Bureau of Consumer Affairs, P.O. Box 8041 Madison WI 53708
Address: 4822 Madison Yards Way, North Tower, Madison, WI 53705
Phone: 608-264-7969 or 800-452-3328
Url: http://www.wdfi.org/
File a Complaint: https://www.wdfi.org/#p7APMc1_5
Number of Wisconsin Consumers Complaints by Topics
According to CFPB Consumer Complaint Database
- Fraud and threat ( 145 )
- Not exiting debt ( 80 )
- Charges from account ( 64 )
- Credit rating ( 35 )
- Not requested loan ( 32 )
- Lender is not available ( 28 )
- Loan to return ( 17 )
- Loan not received ( 12 )
The Quantity of Top Wisconsin Stores by Cities
The History of Payday Loans in Wisconsin
- Before 2010 – Wisconsin is a unique state of sorts. It was the last in the country to introduce payday loan regulations with regard to the amount and the APR. For years, payday lenders in the state led a very frivolous live and offered various loans that were not anyway regulated. Many of these products had no rollover limits, neither lenders were required to check the potential customers in the database.
- 2006 – The Military Lending Act effectively capped payday loans offered to the military at 36% APR. This federal law has no exceptions, thus, no lender in Wisconsin is now allowed to offer loans to the military in excess of 36% APR.
- 2010 – A bill was passed that introduced zoning restrictions for payday loan stores in Wisconsin. Also, it capped the loan amount to $1,500 or 35% of the borrower’s gross monthly income, whichever is less.
- 2011 – Payday loans definition changed and started to include only the loans with the maximum loan term of 90 days. At once, payday lenders started offering new products (installment loans) with longer terms (from 91 days and longer) in order not to comply with the payday loan laws.
- 2011 – 2015 – 308 complaints about payday lenders in Wisconsin were sent to the Department of Financial Institutions. They resulted in 20 enforcement actions on the part of the government of the state.
- June 2, 2016 – The Consumer Financial Protection Bureau (CFPB) proposed a Payday Loan Rule that hasn’t yet fully come into effect (the federal rule is expected in November 2020).
- However, it is unknown whether the rule will ever come into effect. Thus, currently Wisconsin remains one of the states with the most lenient payday loan regulations.
[Updated As of February 2020]