Payday lenders say a proposed rate cap would put them out of business in Wisconsin.
Legislation at the Capitol would cap interest rates on short-term borrowing at 36-percent. Jamie Fulmer with Advance America, a payday lending company, says that would make it impossible for them to stay open. He says it would only allow them to charge about $1.38 for every $100 borrowed on a two week loan. Currently, he says most lenders charge about $20 for that service, which helps them cover their overhead and remain profitable.
Supporters of the bill say the cap is needed to keep customers from getting locked into a cycle of debt, where they have to keep borrowing money to pay off the growing interest. Fulmer says those circumstances are very rare and the overwhelming majority of their customers borrow responsibly.
Fulmer says payday lenders are transparent with the terms of their loans and work to make sure borrowers understand what they’re getting when they receive an advance. He says most see the loans as a way to avoid paying overdraft fees and deal with the aftermath of writing a bad check.
Fulmer says the proposed cap is nothing more than an effort to shut down the industry.
AUDIO: Andrew Beckett reports (MP3 1:09)
