Predatory Lending Elimination Act
Senate Bill Would Cap Personal Loan Interest Rates at 36% Nationwide
Legislative Progress
Key Points
- This bill would create a national limit on how much interest lenders can charge for most personal loans. It sets a maximum annual percentage rate (APR) of 36%, which is the same limit currently used to protect active-duty military members.
- The new limit would apply to many types of high-cost borrowing, such as payday loans, car title loans, and certain installment loans. It aims to stop lenders from charging triple-digit interest rates that often trap people in cycles of debt.
- Some loans are not included in this cap. You would still be able to get standard mortgages for homes and traditional loans to buy a car. Loans from federal credit unions also have their own separate rules.
- For credit cards, the 36% limit applies to the interest rate, but most standard fees like late fees wouldn't count toward that limit. However, extra costs like credit insurance or other add-on products would be included in the calculation.
- State officials, like your State Attorney General, would have the power to sue lenders who break these rules. This gives local leaders more ways to protect people in their states from illegal lending practices.
- If passed, the Consumer Financial Protection Bureau would have one year to write the specific rules, and the law would fully kick in about 18 months after being signed.
Impact Analysis
Personal Impact
Life & Work
Small business owners who rely on short-term, high-interest loans (like payday or title loans) for quick cash flow would benefit from lower borrowing costs. However, small business owners who operate payday lending, title loan, or other high-cost consumer lending businesses could see their business model eliminated or severely disrupted by the 36% APR cap, potentially leading to closures and lost revenue.
Programs
Milestones
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs. (Sponsor introductory remarks on measure: CR S511-512)
Sent to a congressional committee for expert review. The committee decides whether this bill moves forward.
Introduced in Senate
The bill was officially filed and given a number. It now enters the legislative queue.
Votes
No votes have been recorded for this legislation yet.
Related News
4 articlesSenate Bill Would Cap Consumer Interest Rates At 36%
A new Democratic Senate bill—the Predatory Lending Elimination Act—has been introduced to impose a nationwide 36% APR cap on most forms of consumer credit, extending the Military Lending Act standard to all consumers. It targets payday, car-title, and installment loans.
Proposed 36% APR cap is tough sell to GOP, banks
The proposal to extend the military's 36% interest rate cap to all consumer loans faces significant opposition from Republicans and banks. Critics argue it would hamper lenders' ability to price for risk, while supporters say it protects consumers from triple-digit interest debt traps.
ICBA opposing congressional efforts to advance rate caps
The Independent Community Bankers of America (ICBA) expressed opposition to a national 36% interest rate cap, arguing it would make it more difficult for many consumers to obtain credit and harm the very people the legislation seeks to protect.
Source Information
Document Type
Congressional Bill
Official Title
Predatory Lending Elimination Act
Data Sources
Sponsor
Cosponsors
(15)Analysis generated by AI. Always verify with official sources.