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Initiative filed to cap Nevada payday loan interest rates

Payday loans have drawn scrutiny from the Legislature in recent sessions. The effort would cap annual interest rates at 36 percent.
Eric Neugeboren
Eric Neugeboren
EconomyElection 2024
The exterior of a MoneyTree branch

A recently formed nonprofit focused on ending high-interest lending in the state has filed paperwork to begin circulating a petition focused on capping interest rates on certain loans.

The initiative — filed last week with the secretary of state’s office — is the latest effort to crack down on payday loans, typically defined as short-term loans where individuals receive immediate cash and agree to pay back the loan (typically with a high rate of interest) within a short period of time. High-interest loan businesses — such as Dollar Loan Center or MoneyTree — are regulated by the state’s Financial Institutions Division, but state law places no maximum cap on the interest rates that can be attached to a loan. 

The initiative was filed by a recently created nonprofit called Stop Predatory Lending NV and seeks to place a 36 percent annual cap on the interest rates for certain categories of loans, including payday loans and title loans.

For the measure to go up for a vote in the Legislature next year, petition supporters must gather and submit at least 102,362 signatures by Nov. 20, with at least 25,591 signatures coming from each of the state’s four congressional districts. If the Legislature does not pass the initiative when it meets in 2025, the question would be placed on the 2026 general election ballot.

“With no interest rate limit on these loans, Nevada is currently one of the worst states in the country for predatory lending practices. Nevadans deserve better. This initiative will provide meaningful protections for Nevada families by capping rates on short-term loans and better protecting assets from unscrupulous debt collectors,” Peter Koltak, a longtime Democratic campaign consultant and the spokesperson for Stop Predatory Lending NV, said in a statement.

A June report from The Center for Responsible Lending — a nonprofit that opposes high-interest lending — found that the average interest rate for Nevada payday loans was 548 percent, the fifth-highest rate in the country. 

The initiative would also protect up to $5,000 in a person’s bank account from seizure for an unpaid debt, an increase from the current maximum of $400. It would also raise the amount of weekly wages exempt from any kind of garnishment or seizure to up to $850, a rise from the current rate of $369. These values would increase periodically along with inflation. 

The strategy of placing a question on the ballot to cap interest rates has had success in other states. In South Dakota, for example, a 2016 ballot question to cap interest rates at 36 percent received 76 percent of voters’ support.

The high-interest lending industry has drawn some scrutiny from state legislators, but nothing has been done to cap interest rates, which were repealed in 1984 through a special legislative session to incentivize Citicorp to open a credit-card processing center in the state. A 2017 bill that would have capped interest rates at the same rate as the ballot proposal stalled in committee.

A 2019 law (SB201) created a database that tracks high-interest loans and their compliance with state law. Similar legislation failed in the 2017 legislative session. 

The state’s payday lending industry fiercely opposed the regulations surrounding the legislation as overly broad, while proponents heralded the effort as a much-needed accountability measure. A state audit in 2018 found that nearly a third of payday lenders had received a less than satisfactory rating from regulators over the previous five years.

From February 2022 to January 2023, around 150,000 payday loans were made in the state, about 15 percent of which were paid after the due date, according to a report by the state’s Financial Institutions Division.

This story was updated at 2:42 p.m. on 1/8/24 to correct the process for the initiative to appear on a general election ballot.


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