Auto title loans may be re-legalized in Wisconsin

Last year, Wisconsin State became the last state in the United States to regulate the payday lending and title lending industries. Auto title lending was only banned when the governor line-item-vetoed a bill meant to regulate the industry. One committee in Wisconsin is now doing its best to get title lending put back on the ballot. The Wisconsin State legislature will consider the question very soon.

Wisconsin State regulation on lending payday loans

Right now, short-term loans for an auto title are not legal. Wisconsin State has not allowed them to be. There was 2010 legislation that was vetoed selectively. It banned all of these kinds of loans. Payday loans in Wisconsin are also limited to 35 percent of a borrower’s monthly income. No extra interest can be charged when the loan is due, even with late payments. In 2009, Wisconsin’s 527 short-term lender locations lent out $600.5 million.

Republicans in Wisconsin State response

Senate President Mike Ellis, a Republican, has been pushing this year for tighter regulations on payday loans. Regardless of his surprise at the recommendation of the Joint Finance Committee, Ellis agrees that the recommendations should be debated on the merits, instead of as a knee-jerk reaction. Rep. Robin Vos said, as the committees co-chairman, “You can make a case that it was done wrongly the first time. We’re correcting his error and actually adding some better provisions in,” while talking about the belief that the governor’s vetoes changed the bill last year.

The difference between payday lending and title lending

Title lending and payday lending are often lumped in with check cashing and other short-term financial solutions. The under banked community is typically catered to with these products, even though they’re all very different. Payday loans are short-term loans meant to be paid back in two to four weeks. Individuals are able to get higher loan amounts with title lending. Still, collateral such as an automobile is needed due to the risk. Check-cashing services charge a fee for cashing checks for consumers. Each of these services is different and should be regulated and discussed differently.

Citations

WTAQ

wtaq.com/news/articles/2011/may/13/jfc-approves-measures-including-auto-title-loans/

JS Online

jsonline.com/news/statepolitics/121731299.html