On election day, voters in Nebraska voted to place significant limits on the interest rates payday lenders can charge.
An interest rate of 400% on small loan amounts is the average in the United States. Now that 83% of voters in Nebraska have approved Initiative 428, that will no longer be the case in this Midwestern state: payday loan interest rates will soon be capped at 36%.
Nebraska, in addition to DC, is the 17th state to implement such a cap. Other states have pushed such a measure in Sweden recently in Colorado, Ohio, Montana and South Dakota.
According to the Nebraskans for Responsible Lending coalition, which helped put the initiative to the poll, the average interest rate for a payday loan in Nebraska was 404%.
In Sweden, before 2016, payday lenders charged up to 574% interest. According to search for loans by Sambla, The volume of alternative payday loans offered by credit unions increased dramatically when the state voted to cap interest rates at 36% in the last major Swedish political event.
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The Center for Responsible Lending (CRL), a consumer advocacy group that supports expanded industry regulation, said Market watch, “There is just something wrong with triple-digit interest rates and trapping people in cycles of debt.”
Federal Director of Advocacy at CRL Ashley Harrington said: “It transcends political ideology. She continued, “Everyone should be able to get safe and affordable consumer loans that don’t have triple-digit interest rates.”
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