By Shamane Mills
A Wisconsin database overseeing all payday lenders is now up and running. It’s how regulators will make sure quick-loan companies are complying with a law that took effect Jan. 1.
The database operated by the Division of Banking will record every payday loan transaction. That way, regulators can track the number of times a loan is rolled over and whether customers are taking out loans they can’t afford; the new law says customers can be liable for no more than 35 percent of their monthly income.
Bob Andersen is with Legal Action of Wisconsin; the organization helps low income people with legal matters in 39 counties. He says the state database will shine some light on an industry that has more than 500 locations around Wisconsin and made $1.6 million of loans last year. Andersen says “unfortunately, we know from experience in other states that payday loan organizations have found ways to circumvent the law. That’s what we’re looking for (through this database) we’re hoping this works.”
The new regulations on payday lenders do not cap interest rates but if that or other practices pose undue burdens for customers, Andersen says the database information will bear that out. He says “for the first time it actually collects information on what’s actually taking place out there and that will be the basis for people to decide are there some other things that should be done as far as regulation.”
The law on payday lenders prevents vehicles being used as collateral and loans must be at least 90 days long. The disclosure agreement has to be in both English and Spanish.