ARG:klm
2023 - 2024 LEGISLATURE
SENATE SUBSTITUTE AMENDMENT 1,
TO SENATE BILL 832
January 18, 2024 - Offered by Senator Cabral-Guevara.
SB832-SSA1,1,5 1An Act to repeal 138.14 (1) (g); to renumber 138.14 (9m); to amend 138.14 (9g)
2(a) 3., 138.14 (10) (b) 2., 138.14 (11) (b), 138.14 (12) (b), 138.14 (12) (f) and 138.14
3(14) (m); to repeal and recreate 138.14 (1) (k); and to create 138.14 (1) (km),
4138.14 (9g) (a) 7., 138.14 (9m) (a), 138.14 (9r) (g), 138.14 (10) (c) and 138.14 (12)
5(g) and (h) of the statutes; relating to: payday loans.
Analysis by the Legislative Reference Bureau
This bill redefines a payday loan and makes other changes related to the
regulation of payday loans.
Under current law, a person other than a financial institution or its affiliate
must be licensed by the Division of Banking (division) in the Department of Financial
Institutions to originate or service a payday loan involving a Wisconsin resident. A
“payday loan" is defined as a transaction between an individual with an account at
a financial establishment and another person (payday lender) in which the payday
lender agrees to accept a check or electronic fund transfer (EFT) authorization from
the individual, to delay negotiating the check or initiating the EFT for a period of
time, and to extend a loan to the individual for a term of 90 days or less. Current law
imposes various requirements and restrictions on payday loans and licensed payday
lenders. For example, a payday lender may not make a payday loan that results in

the customer having an outstanding liability in principal, interest, and fees on all
payday loans held at the same time by the customer of more than $1,500 or 35 percent
of the customer's gross monthly income, whichever is less. A payday lender must also
provide to an applicant certain information before entering into a payday loan,
including disclosing fees and costs and the loan's annual percentage rate and
providing written materials prepared by the division.
This bill eliminates the foregoing definition of a payday loan and instead
defines a payday loan as a loan to which all of the following apply: 1) the loan's
maturity date is not more than six months after the loan's origination date; and 2)
the loan is not secured by real property or other collateral. The bill prohibits a payday
lender from making or offering to make a payday loan having a maturity date less
than 90 days after the loan's origination date.
The bill also imposes the following additional restrictions and requirements on
payday loans:
1. A payday lender may not make or offer to make a payday loan unless the loan
agreement requires the loan to be repaid in substantially equal periodic payments
over substantially equal intervals.
2. All payday loans must be precomputed, which is defined as a transaction in
which the debt is expressed as a single sum comprised of the amount financed and
the finance charge computed in advance.
3. Before entering into a payday loan, a payday lender must undertake a
reasonable underwriting process to verify the applicant's ability to repay the payday
loan. The payday lender may not make a payday loan in an amount that exceeds the
amount the applicant is capable of repaying, as determined by the payday lender's
underwriting process, or the maximum amount established under current law (as
described above), whichever is less.
4. Before entering into a payday loan, a payday lender must disclose to the
applicant, in a clear and conspicuous manner, the payment plan and the amount of
interest that will be paid over the course of the loan. The payday lender must also
disclose to the applicant the availability of a financial literacy course of no more than
three hours' duration that the bill requires the division to develop or make available
to the public.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB832-SSA1,1 1Section 1. 138.14 (1) (g) of the statutes is repealed.
SB832-SSA1,2 2Section 2. 138.14 (1) (k) of the statutes is repealed and recreated to read:
SB832-SSA1,2,33 138.14 (1) (k) “Payday loan" means a loan to which all of the following apply:
SB832-SSA1,2,54 1. The loan's maturity date is not more than 6 months after the loan's
5origination date.