AFSA Publishes Rate Cap Legislation White Paper

On April 2, AFSA’s State Government Affairs department published its recent rate cap legislation white paper. AFSA’s white paper examines recent measures proposed by states to impose rate caps, including those that use an APR calculation consistent with the Truth in Lending Act (TILA), and rate caps with APR variants more broad than TILA. The white paper also provides an overview of recent state legislation to update existing interest rate bands and fee structures. Importantly, the paper notes that these rate caps often tend to harm the very people the proponents of the rate caps seek to protect, as low APR caps for small loans tend to create zones where legal, affordable small dollar loans are unobtainable.

With consumer advocacy groups continuing their push for states to impose rate caps on small dollar loans, it’s critical for traditional installment lenders to stay informed on the efforts in their own states. AFSA is committed to monitoring the ongoing evolution of the laws and regulations surrounding state rate caps, and AFSA will continue to keep members apprised of relevant changes.

AFSA’s State Government Affairs team publishes white papers monthly, and AFSA members can find previous papers on AFSA’s website under the SGA Resources section.