Voters Will Decide Whether To Cap Interest Rate For Payday Loans At 36%

A Paycheck Advance center in Lincoln. (Becca Costello, NET News)
August 6, 2020 - 2:31pm

Nebraska voters will soon decide whether to significantly lower the cap on interest rates for payday loans. This week the Secretary of State’s office confirmed there are enough signatures to put the issue on November’s ballot. 

Delayed deposit loans are more commonly known as payday loans – they give a company direct access to the borrower’s bank account, and they can charge interest rates of 400% or more.

"TThey’re essentially designed to be loans that are only profitable if a borrower can’t pay them back," said Aubrey Mancuso, executive director of Voices for Children in Nebraska

She also works with Nebraskans for Responsible Lending, the group that collected the signatures.

"We see families in some cases end up paying off a $500 loan for tires over the course of six years because of the fees that keep added on those loans," Mancuso said. "And sometimes they end up actually having to take off other loans in the amount of thousands of dollars to pay back a loan that was initially only a few hundred dollars." 

A federal law protects active-duty military families with a 36% rate cap. And Mancuso says 16 states and the District of Columbia have limited payday lenders to charging no more than about 36% increase. That’s what the Nebraska ballot initiative would do.

"Payday loans almost always make a bad situation worse," Mancuso said. "And so I think as families are struggling economically we want them to have access to credit that’s fair, that helps them build for a better future."

The election is on November 3.

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