An Act to renumber and amend 138.09 (3) (f); to amend 138.09 (1c) (a) 3. (intro.) and 4., 138.09 (1g) (a) 1., 138.09 (7) (bp) and 422.201 (3); to create 138.09 (3) (f) 1. to 6., 138.09 (3) (fm), 138.09 (7) (bs) and 138.09 (13) of the statutes; Relating to: interest rates on consumer loans and activities of consumer lenders regulated by the Department of Financial Institutions. (FE)
Impact
The bill specifically seeks to enhance transparency and accountability within the consumer lending market. It mandates that licensed lenders provide annual reports that detail the number of loans with an APR exceeding 18 percent, the average APR of such loans, and other key metrics related to loan performance and outcomes. Such reporting will enable closer monitoring of lending activities and prompt action if lenders fail to comply with the new regulations.
Summary
Assembly Bill 763 aims to regulate interest rates on consumer loans by the Department of Financial Institutions in Wisconsin. The bill establishes a maximum annual percentage rate (APR) of 36 percent for licensed lenders, which dramatically impacts the lending landscape, particularly for those seeking consumer loans with traditionally higher interest rates. Under current law, there is no ceiling on the APR that can be charged by licensed lenders, making this a significant change aimed at protecting consumers from predatory lending practices.
Contention
Despite the perceived benefits of increased regulation, AB763 may face opposition from stakeholders including lenders who argue that the specified APR cap could limit access to credit for higher-risk borrowers. Critics of the bill may also raise concerns regarding the potential for unintended consequences, such as diminished lending options or the emergence of alternative financial products that evade regulation. Furthermore, discussion may arise over whether this will deter innovation in lending practices and affect the market’s ability to adapt to consumer needs.