South Dakota voters approve interest rate cap on payday loans

Courtesy MGN

(KSFY) - Voters in South Dakota have approved an initiated measure that would cap interest rates on short-term loans in the state.

The Associated Press declared a win for Initiated Measure 21 around 10:00 p.m. Tuesday, with around 75 percent of voters approving the measure. It caps interest rates on payday and car title loans at 36 percent. Under current laws, there is no limit on how much interest lenders can charge on these loans.

A competing measure, Amendment U, currently looks likely to fail, with 60 percent of votes against it. It would have allowed for lenders to charge any interest rate on payday loans as long as the loan was made in writing. It would have also made it difficult to pass a law limiting interest rates in the future.

Opponents of IM 21 warned if it was passed, it could put an end to the payday loan industry in South Dakota. Supporters say payday lenders hand out predatory loans targeted at the poor.

A 2014 Pew Charitable Trusts report found the average annual percentage rate charged for a payday loan in South Dakota was 574 percent.