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Some Wisconsin Republicans Favor Payday Lenders Despite Their Bad Reputation
May 28th, 2011
Once again Wisconsinites may be able to secure loans using auto titles
This is according to a proposal in the state Legislature which is designed to roll back restrictions on payday lenders. Repealing the law that was passed last year is a bad idea for two reasons. The first is that it exposes those already in dire economic situations to lenders that charge shockingly high annual interest rates of up to 500 percent or more. The second is that lawmakers want to insert the change in the state budget, and it doesn’t belong there.
The proposal is added
The Joint Finance Committee voted 11-5 this month to add the proposal to the budget. The legislature has long advocated keeping policy issues out of the budget, which should only be about spending. Both parties have been guilty of this, but that doesn’t make it right. If lawmakers are going to slip provisions into the budget, these are terrible ones to choose.
Payday loans and auto title loans
These can exacerbate the debt spiral. If people are short on cash, they can get a short-term loan from a lender by paying a fee and writing a post-dated check. The problem comes when the cash is used, and there aren’t enough funds to cover the loan when it comes due.
Interest rates
The interest rates that auto title loan lenders charge would make credit card companies blush. They put people in jeopardy of losing their means of transportation if they can’t pay their debt.
Predatory lending practices
Last year, Wisconsin decided it had had enough with predatory lending practices. Sen. Mike Ellis of Neenah called short-term lenders “legal thieves”. This year, lawmakers are deciding to let them creep back into the market. It’s just setting the poor up for further misery.
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