Supporters of Michigan’s payday loan interest rate cap ballot initiative met the June 1, 2022 deadline to participate in the November 2022 ballot in the state. If not taken up by the state legislature this summer, the proposal would ask voters to approve a state law capping interest rates on payday loans, which can currently reach more than 370% APR. , to a maximum of 36% APR.
The statutory process initiated indirectly by the State requires collection of a timely signature support equivalent to eight percent of the votes cast for Governor in the last gubernatorial election, or 340,047 for the 2022 election, in order to be considered. Michiganders for Fair Lending – the sponsor of the initiative – collected over 570,000 signatures of which 405,265 were submitted (after a quality control process). The group cited numerous concerns as to why the payday loan interest rate cap was necessary, including evidence that current rate conditions are trapping the state’s vulnerable citizens in a cycle of debt, make it difficult to obtain housing and have a disproportionate impact on rural communities and communities of color. . They note that similar state initiatives have been passed with significant bipartisan support and list partner partners such as the Community Economic Development Association of Michigan (CEDAM), Project GREEN, Lake Trust Credit Union, ACLU, NAACP of Grand Rapids, Habitat for Humanity, United Way of Michigan, Michigan League for Public Policy, Center for Responsible Lending; Civil Justice Center; and Black Impact Collaborative.
After meeting the deadline to submit the necessary signatures, once validated by the Board of State Solicitors, the Michigan Legislature will have 40 days to approve the initiative, as submitted. If the legislature rejects the proposed initiative or fails to act in time, the proposal will be placed on the November 2022 ballot for voters to decide. If passed, Michigan would join 18 states plus the District of Columbia that have capped payday loan rates at 36% APR or less. The cap figure mirrors that of the interest rate cap on lenders serving active duty members and dependents established by the Military Loans Act, and has been a recent benchmark for “all understood”. As the sponsor noted, these types of ballot initiatives are generally popular with voters, and the initiative is highly likely to become law in Michigan.