Payday Loans Nebraska
The Tuesday ballot initiative that would have capped rates on payday loans in Nebraska at 36% was supported by a majority of Nebraskans. According to the Nebraska Secretary-of-State, 83% of Nebraska voters voted for Measure 428. The ballot measure would have imposed a 36% annual cap on interest rates for payday loans. Nebraska became one of 17 states that imposed restrictions on interest rates and fees for payday loans.
Why the payday loan initiative was supported
Ronald Newman, the national political director of the ACLU said that this was a major victory for Nebraska consumers. Predatory payday lending only makes racial inequality in the economy worse. These lenders disproportionately target people of color, trapping them into a cycle of debt and making it difficult for them to build wealth.
According to the Nebraskans for Responsible Lending coalition which assisted in getting the initiative on the ballot, the previous average interest rate for payday loans in Nebraska was 404%.
Nebraska payday loan terms
These loans are available from lenders who require that borrowers present a valid ID and proof of income to the lender to obtain the loan. The balance is due two weeks later, usually on your next payday.
According to the Consumer Federation of America, lenders in Nebraska can charge as much as $15 per $100 borrowed. Individual borrowers may also be eligible for loans up to $500.
Payday Loan Rates
Nebraska is among a few states that have passed payday loan restrictions in recent years. In 2016, South Dakota voters approved a 36% cap. Colorado followed suit in 2018. Last year, Ohio imposed restrictions on interest rates, loan amounts, and duration. New Hampshire placed a rate cap of 36% in effect in 2009 and Montana passed a similar law.
States where payday loans are illegal
These types of loans are prohibited in Arizona, Arkansas, and Georgia. Some also prohibit interest rate caps for other types of consumer loans.
According to the National Conference of State Legislatures, 37 states in the United States have specific statutes that permit some form of payday lending.
Payday loan rates for veterans
In November 2019, federal lawmakers introduced similar legislation via the Veterans and Consumers Fair Credit Act. This bill would have interest rates capped at 36% for all consumers across the country. This bipartisan legislation, which is the latest attempt at curbing payday loans at federal levels, was based on the 2006 Military Lending Act which set a 36% loan cap for active-duty military personnel.
Despite Republican and Democrat co-sponsors of the bill, it remains deadlocked, forcing Nebraska’s coalition to continue with local campaigns.
Advocates hope the Nebraska win will inspire voters and lawmakers across the country to pay attention. “[This] vote shows that there is still common ground on important issues such as economic and racial justice. “Protecting our neighbors is an American value’’, Danielle Conrad, Executive Director at the ACLU of Nebraska, says.
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