Senate Bill 632 will cap payday lending loan interest rates at 36%, put Michigan on par with 20 other states and D.C.
LANSING, Mich. (March 14, 2024) – Today, the Michigan Senate passed Senate Bill 632 with bipartisan support. The legislation, sponsored by Sen. Sarah Anthony (D-Lansing), will cap interest rates on payday lending loans in Michigan at 36%.
“This long-awaited change is one step closer to becoming law thanks to the efforts of my Senate colleagues and the ongoing advocacy from stakeholders and impacted residents,” said Sen. Anthony. “Combatting predatory payday lending practices protects our communities from financial vulnerability and generational debt. At the end of the day, financial prosperity is especially important as we work to help all Michiganders thrive.”
People who use payday lenders are more likely to file for bankruptcy than non-borrowers with similar financial circumstances. In addition, 70% of payday borrowers in Michigan reborrow the same day they pay off a previous loan and 75% of payday lenders’ revenue comes from borrowers caught in 10 loans per year. Studies also show that payday lending stores are more likely to operate in Black and Latino communities, which can contribute to long-term economic disparities.
Senate Bill 632 has widespread support from consumers, financial experts and community advocates from around the state. This includes well-known state and national policy advocates like the Community Economic Development Association of Michigan, the Michigan Catholic Conference, the Michigan League for Public Policy, and the Center for Responsible Lending as well as more than 100 local groups from communities across Michigan, from Adrian to Marquette, Detroit to Muskegon, Lansing, and almost everywhere in between.
This legislation would bring Michigan in line with 20 other states and the District of Columbia. SB 632 now moves to the House for consideration.
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