The legislation would cap payday lending interest rates at 36% APR 


LANSING, Mich. (Nov. 1, 2023) – Today, Sen. Sarah Anthony (D-Lansing) and Rep. Abraham Aiyash (D-Hamtramck) introduced SB 632 and HB 5290, which would cap payday lending interest rates at 36% APR, bringing Michigan in line with 20 other states and the District of Columbia. 


“The payday lending industry targets low-income, rural, and other marginalized communities, trapping countless Michiganders in cycles of debt that usually end in bankruptcy,” said Anthony. “It is far past time to reign in this industry by bringing our rate caps in line with 20 other states across the country and instead look to promote viable alternatives to payday loans.” 


In Michigan, 70% of payday borrowers reborrow on the same day they pay off a previous loan. 75% of payday lenders’ revenue comes from borrowers caught in 10 loans or more per year. As an industry, payday lending drains millions from Michigan’s economy each year.  


“I started my work as an organizer addressing the concerns of predatory lending practices. The reality is payday lenders are more likely to be present in communities like mine — that are a little bit more black, a little bit more brown, and a little bit more poor than the rest of the state,” said Aiyash. “We know this is by design.” 


Payday lenders target low-income and marginalized communities, particularly communities of color. According to one study, 77% of the advertisements at physical locations of payday lenders targets were racial minority groups. In fact, statewide, payday lending stores are more likely to operate in communities that include significant populations of African Americans or Latinos.  


“While payday loans are marketed as a quick way to solve an unexpected expense, they often lead to perpetual debt due to high payday loan rates, which often exceed 340%. These high rates make it very difficult, if not impossible, for Michiganders who need to pay them back in time,” said Monique Stanton, President and CEO of the Michigan League for Public Policy. “These kinds of cash traps are also predatory in nature as they often target people who are financially vulnerable. Payday lenders also disproportionately locate stores in rural and low-income areas as well as in Black and Latinx communities, where people have already faced extraordinary barriers to prosperity due to systemic racism and our country’s history of discriminatory housing practices.” 


“CEDAM members work directly in communities and see the impact of predatory payday lending up-close, including overdraft and bounced check fees, closed bank accounts, and even bankruptcy. Payday loans take millions of dollars from the pockets of Michiganders and from our local economy, weakening our communities, and further straining existing charitable or government services,” said Jessica AcMoody, Policy Director for the Community Economic Development Association of Michigan (CEDAM).  


“The Michigan Coalition for Responsible Lending, of which CEDAM is a part, supports this legislation and has worked on payday lending reform for years. This coalition includes faith-based organizations, veterans organizations, credit unions, locally-based nonprofits, and others. The coalition applauds this first step in curbing predatory loans and lifting up safer, alternative lending options.”


“Almost 80% of those that Project GREEN surveyed about the impact of payday lending said that their payday loan made their financial situation worse than before the loan. Payday loans are like prescribing poison to people who are sick. It’s making it worse in the long run,” said Dallas Lenear, Executive Director/Founder of Project Green.