On Election Day, Nebraska voters voted to put significant caps on the interest rates that lenders can charge on payday.
A 400% interest rate on small dollar loans is the state average. Now that 83% of Nebraska voters have passed Initiative 428, that won’t be the case in this Midwestern state – interest rates on payday loans will soon be capped at 36%.
Nebraska, in addition to DC, is the seventeenth state to implement such a limit. Other states that have pushed for such a measure in recent years include Colorado, Ohio, Montana and South Dakota.
According to the Nebraskans Coalition for Responsible Lending, which helped put the initiative on the ballot, the average interest rate for a payday loan in Nebraska has been 404%.
In South Dakota, prior to 2016, payday lenders charged up to 574% interest. According to Brookings, The volume of alternative payday loans offered by credit unions grew significantly when the state voted to cap interest rates at 36% in the last US election.
The Center for Responsible Lending (CRL), a consumer advocacy group that supports the expansion of industry regulation, said that Market Clock, “There is something wrong with triple digit interest rates and trapping people in debt cycles.”
CRL Federal Defense Director Ashley Harrington stated: “This transcends political ideology.” He continued: “Everyone should be able to support affordable and safe consumer loans that do not carry triple-digit interest rates.”
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