Bill > SB832

Introduced Session

This bill redefines a payday loan and makes other changes related to the regulation of payday loans. Under current law, a person other than a financial institution or its affiliate must be licensed by the Division of Banking (division) in the Department of Financial Institutions to originate or service a payday loan involving a Wisconsin resident. A “payday loan" is defined as a transaction between an individual with an account at a financial establishment and another person (payday lender) in which the payday lender agrees to accept a check or electronic fund transfer (EFT) authorization from the individual, to delay negotiating the check or initiating the EFT for a period of time, and to extend a loan to the individual for a term of 90 days or less. Current law imposes various requirements and restrictions on payday loans and licensed payday lenders. For example, a payday lender may not make a payday loan that results in the customer having an outstanding liability in principal, interest, and fees on all payday loans held at the same time by the customer of more than $1,500 or 35 percent of the customer's gross monthly income, whichever is less. A payday lender must also LRB-5164/2 ARG:emw 2023 - 2024 Legislature SENATE BILL 832 provide to an applicant certain information before entering into a payday loan, including disclosing fees and costs and the loan's annual percentage rate and providing written materials prepared by the division. This bill eliminates the foregoing definition of a payday loan and instead defines a payday loan as a loan to which all of the following apply: 1) the loan's maturity date is not more than six months after the loan's origination date; 2) the loan agreement requires the loan to be repaid in equal periodic payments over the course of the loan; and 3) the loan is not secured by real property or other collateral. The bill prohibits a payday lender from making or offering to make a payday loan having a maturity date less than 90 days after the loan's origination date. The bill also imposes the following requirements on payday loans in addition to current law requirements: 1. Under the loan agreement, a portion of each periodic payment by the customer must be applied to loan principal and the percentage of the payment applied to principal must be the same for all periodic payments made by the customer on the payday loan. 2. Before entering into a payday loan, a payday lender must undertake a reasonable underwriting process to verify the applicant's ability to repay the payday loan. The payday lender may not make a payday loan in an amount that exceeds the amount the applicant is capable of repaying, as determined by the payday lender's underwriting process, or the maximum amount established under current law (as described above), whichever is less. 3. Before entering into a payday loan, a payday lender must disclose to the applicant, in a clear and conspicuous manner, the payment plan and the amount of interest that will be paid over the course of the loan. The payday lender must also disclose to the applicant the availability of a financial literacy course of no more than three hours' duration that the bill requires the division to develop or make available to the public. For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

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Committee Categories

Rachael Cabral-Guevara (R)*,  Scott Allen (R),  Sue Conley (D),  Dora Drake (D),  Jeff Mursau (R),  Sylvia Ortiz-Velez (D),  Lori Palmeri (D),  Nik Rettinger (R),  Donna Rozar (R), 

Failed to pass pursuant to Senate Joint Resolution 1 (on 04/15/2024)

Official Document