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July 19, 2021

Are state interest-rate caps an automatic win for borrowers?

  • Consumer advocates say that caps free borrowers from predatory lending models.
    • By ANNIE MILLERBERND
    NerdWallet

    Small-dollar, short-term lenders, unburdened by a federal maximum interest rate, can charge borrowers rates of 400% or more for their loans.

    But more states are bringing that number down by setting rate caps to curb high-interest lending. Currently, 18 states and Washington, D.C. , have laws that limit short-term loan rates to 36% or lower, according to the Center for Responsible Lending. Other states are weighing similar legislation.


     
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