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Nebraska Needs a 36% Rate Cap

Payday loans create a cycle of harmful debt.

Unlike responsible lenders, payday lenders don’t check whether a loan is actually affordable to a borrower by considering both their income and their existing obligations. Instead, payday lenders simply gain direct access to a borrower’s bank account. Without sufficient funds left to pay for other obligations, borrowers flip into new loans with quickly escalating fees -- this creates a debt cycle that forces people into a worse position than when they started.

Payday lenders are a drain on Nebraska’s families and the state economy. Nearly 65% of payday loan storefronts in Nebraska are owned by out-of-state corporations. These huge corporations are lining their pockets by extracting millions from Nebraska families who can least afford it.

This is an issue that also impacts our Veterans. When the Department of Defense reported that payday loans were impacting military readiness, Congress protected active-duty military families with a 36% rate cap under the federal Military Lending Act. However, Nebraska veterans remain unprotected and are often targeted by these predatory 400%+ APR payday loans.

The evidence shows that in states that have stopped predatory lending, people turn to better options. Currently, 16 states and the District of Columbia have enacted rate caps of about 36%, saving consumers billions of dollars annually in predatory fees.