Nebraska voters will get a chance this fall to set a hard cap on how much interest short-term lenders can charge customers for so-called “payday loans.”
The Secretary of State’s Office said Wednesday that petition circulators exceeded the 85,628 valid signatures from registered voters required to place the measure on the Nov. 3 ballot.
“We found overwhelming support from Nebraskans when circulating this petition, and we are very pleased it’s official,” said Aubrey Mancuso, a spokesperson for Nebraskans for Responsible Lending and Voices for Children executive director.
Nebraska Secretary of State Bob Evnen said in a press release that counties had verified more than 5% of registered voters signed in 46 of the state’s 93 counties.
“I can confirm that the statutory requirements for valid signatures have been met,” Evnen said, adding that the circulators would be notified by certified letter.
The ballot initiative would cap payday loans at an annual interest rate of 36%, the same limit enacted in 16 states plus the District of Columbia and in federal law when dealing with military personnel.
Payday loans allow people to write checks that won’t be immediately cashed and receive small amounts of cash right away. They offer short-term, high-cost borrowing.
Payday lenders are often used by people who lack access to more traditional forms of credit, like bank lending or credit cards — or who have an expense to cover that cannot wait.
Last year in Nebraska, payday lenders, using fees for a short-term loan, charged average annual interest rates of about 387% and collected more than $29 million in fees and penalties, state records show.
The average loan amount was $346, according to a report from the Nebraska Department of Banking and Finance.
Lenders typically charge a 15% fee rather than traditional interest. What that means is someone who borrows $85 would write a check dated two weeks later for $100.
Groups critical of the loans say they often lock people already struggling with debt into vicious cycles of higher-interest debt where people borrow money at higher rates to cover what they owe.
Kent Rogert, a lobbyist for the Nebraska Financial Services Association, said the businesses would continue to explore their legal options against the ballot initiative. Lawyers for several businesses are looking at multiple parts of the ballot language they think are unfairly biased against a product that helps people who couldn’t access credit, he said.
At least one lender has filed a lawsuit in Lancaster County District Court challenging the ballot language.
Evnen acknowledged those legal maneuvers and said Attorney General Doug Peterson would defend the state in court.