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A Complete Guide to Payday Loan Consolidation in Wisconsin
Wisconsin features very few laws protecting consumers from the predatory practices of payday lenders. For borrowers struggling to pay back piles of payday loan debt, one option that is available has the potential to get you back on your feet: payday loan consolidation.
Payday loan laws in Wisconsin
Payday loans are loosely regulated in Wisconsin, making the state one of the more troubling regions of the country to be a borrower. There are no set limits on the loan amount or its interest rate, though the total amount of outstanding loans cannot exceed $1500 or 35% of the borrower’s gross monthly income. Wisconsin allows for one rollover per loan and institutes a 24-hour cooling-off period between two unique loans.
Additional fees in the state include a maximum 2.75% monthly interest rate if the borrower has not paid in full prior to the maturity date. NSF fees are capped at $15.
Payday lenders must be licensed in order to legally operate in the state, regardless if they are online-only or a brick-and-mortar business. Despite the lax laws, the state does have guidelines for lenders to abide by, though they are not official laws. These principles include educating borrowers on how payday loans work and disclosing all charges that could be attributed to the payday loan. A database must also be maintained recording each payday loan that a consumer takes out. Payday loans are regulated by the Wisconsin Department of Financial Institutions.
What will happen if you can’t repay a payday loan in Wisconsin
Criminal actions are prohibited against borrowers who are unable to pay back their payday loans. While borrowers will not face jail time, lenders can still bring them to court for failing to repay. Lenders are not required to check a borrower’s ability to pay back their loan, so you enter into an agreement at your own risk. Contact the Wisconsin Department of Financial Institutions if you run into a lender issue. You can file a complaint on their site regarding any action from a lender that seems problematic.
What is the statute of limitations on payday loans in Wisconsin?
In Wisconsin, the statute of limitations on payday loans is six years. This means that if you are unable to pay back your loan, the lender has six years to try and collect the debt via the court system.
How to consolidate your payday loans in Wisconsin
Payday loan consolidation can help you escape the high-interest debt eating away at your paycheck. Payday loan consolidation, also known as credit consolidation and payday loan relief, lumps all of your loans together to give you one simple monthly fee. Borrowers will typically collaborate with a debt consolidation company to develop a manageable payment plan. They will usually pay off your current loans and negotiate with the lenders to reduce any outstanding loan terms. In exchange, borrowers pay them a fixed rate going forward instead of the lender.
If your credit is reasonably good, you could take out a loan, then use it to immediately pay down all your other loans. This simplifies your finances by giving you one fixed monthly payment at a lower interest rate. Just be aware that you'll still face late fees and other penalties if you miss a payment. If your credit is better than average, it's worth looking into whether you qualify for a credit card with a low introductory interest rate. This can save hundreds or even thousands of dollars in interest charges.
A debt management plan (DMP) is another option. A DMP is similar to payday relief in that you pay one set monthly payment on a collection of your debts rolled together at a lower interest rate. The difference is that you’re still paying back your original loan amount instead of entering a payment plan with a third party company that wipes out your original debt. DMPs are usually run by nonprofit credit counseling services, so they can be a relatively inexpensive option, with monthly fees ranging from $25 to $55.
By the numbers: Payday lenders in Wisconsin
- Max loan term: 90 days
- Average loan amount: $550
- Maximum loan amount: $1,500 (or 35% of the gross monthly income)
- APR Cap: None, average of 574%
- Number of payday lenders in Wisconsin: 227
- Average 14-day payday loan APR: 574%
- Collection fees: 2.75% interest fee plus a $15 NSF fee
- Poverty rate in Wisconsin: 10.4%
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Other Resources for Help Paying My Payday Loan in Wisconsin
There can be an incredible amount of stress and worry when dealing with payday day loan debt. Oftentimes, payday loan consolidation can be the first step back toward financial stability, no matter the method you choose. Contact the Wisconsin Department of Financial Institutions if you are in need of payday loan help.
Wisconsin Department of Financial Institutions
4822 Madison Yards Way
North Tower, Madison, WI 53705
Phone: (608) 261-9555
Additional state resources to utilize: