The USA wide 'Predatory Lending Elimination Act' Doesn't Eliminate Predatory Lending. It Eliminates Lending.
Published: Wed, 02/11/26
Updated: Wed, 02/11/26
170 organizations just asked Congress to make it illegal for you to serve the borrower no one else will touch.
Senate Bill S3793, the "Predatory Lending Elimination Act," would slam a 36% APR cap on virtually every consumer credit product in America. Credit cards, installment loans, car title loans, payday loans...
All of it.
Senator Jack Reed & 15 co-sponsors call it "commonsense."
I call it a credit death sentence for 45 million subprime Americans who already cannot get a bank loan.
Here is what 170 consumer advocacy groups will never tell your borrowers.
The math does not work at 36% APR.
A $500 loan for 90 days at 36% APR generates $44 in revenue. After you pay for underwriting, compliance, licensing, software, rent, wages, collections, charge-offs, & customer acquisition, you are underwater before the first payment posts.
PREFER TO READ ONLINE:
https://thebusinessoflending.com/the-usa-wide-predatory-lending-elimination-act-doesnt-eliminate-predatory-lending-it-eliminates-lending/
That is not a lending business. That is a charity with a storefront.
We already ran this experiment. It failed.
Illinois imposed a 36% all-in rate cap in March 2021. The results are not theoretical. The results are documented.
Lenders left the state. The number of loans to subprime borrowers dropped 38%. Deep subprime borrowers lost 57% of their access to credit. Average loan sizes jumped 35% because lenders needed bigger balances to survive the math.
Here is the part the advocacy groups never quote. 39% of surveyed borrowers said their financial well-being got worse after the cap. 79% wanted their previous lender back. Nearly 60% said they could not borrow money when they needed it.
The cap didn't protect them. It abandoned them.
The real loan shark is not your storefront. It is the overdraft fee, the late utility penalty, the repo truck, & the $35 NSF charge from the same bank that rejected their application.
When regulated lenders leave, borrowers still need money. They turn to unregulated options, or they go without. They lose cars, jobs, housing, & momentum.
That's not consumer protection. That is consumer exile
If you are a lender, an operator, or someone building in this space, this bill matters to you
Not because it will pass tomorrow. Because it signals where the regulatory pressure is headed. If your underwriting, pricing, fee structure, & compliance documentation are not airtight, you're already behind.
Operators who survive regulatory waves are the ones who see them coming, not the ones who read about them after the fact.
I cover exactly this kind of threat, and how to build around it, in my FREE NEWSLETTER, The Business of Lending"
https://thebusinessoflending.com/newletter/
If you lend money to the masses, or want to, this is required reading.
What is your take?
Should the government cap what a willing borrower can pay a willing lender?
Or does a 36% APR cap just create credit deserts & push the most vulnerable into worse options?
Drop your take in an email to Jer@theBusinessOfLending.com. I read every email.
How to Loan Money to the Masses
Jer - 702-208-6736 Cell
Jer@theBusinessOfLending.com
https://theBusinessOflending.com
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