Washington, DC November 12, 2019 – Advocates at the National Consumer Law Center (NCLC) applauded today’s presentation in Congress of a bill to cap interest rates nationwide to 36%, including interest rates. fees, which NCLC supports on behalf of their low-income families. clientele.
“It is fitting that as we celebrate Veterans Day we honor our veterans by providing them and all Americans the same protection that our service members receive: protection against loan sharks that exceed 36% APR.” said Lauren Saunders, associate director of the National Center for Consumer Law. “Most Americans would be surprised to learn that predatory lenders today can legally charge interest rates of 100%, 200%, or even higher in many states. While a 36% rate cap sounds high to most people and won’t hurt legitimate businesses, it will stop the most heinous forms of loan encroachment. The 36% interest rate cap dates back more than a century and is widely supported by the American public on a bipartisan basis. Reasonable interest rate caps are the simplest and most effective protection against predatory loans. “
The Veterans and Consumers Fair Credit Act (Act) would stop predatory high-cost lending and also prevent banks from returning to the payday loan business, by setting a national maximum rate of 36% APR, including fees. of consumer loans. A few years ago, banks were making “deposit advance” loans, also known as payday bank loans, at rates above 200%, and with a change in leadership from bank regulators, some banks are thinking of returning. to those loans. There is currently no generally applicable national interest rate cap, although many states limit interest rates. In 2018, Colorado joined a growing number of states, including South Dakota (2016) and Montana (2010), whose voters have roundly approved bipartisan initiatives to cap interest rates to 36% or less.
The bill is sponsored in the Senate by Senators Merkley (D-OR), Brown (D-OH), Reed (D-RI) and Van Hollen (D-MD); and in the United States House of Representatives by Representatives Grothman (R-WI) and Chuy García (D-IL).
The legislation is modeled after the federal Military Loans Act, which limits loans to service members and their dependents to 36%. But the MLA does not cover veterans or other consumers.
“Importantly, the Veterans and Consumer Fair Credit Act would allow states to set a lower rate, which is especially important for larger loans. While 36% is a reasonable rate for small loans, many states limit a $ 10,000 loan to 25% APR or less. ” Saunders added.
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