Congress moves to cap predatory lending at 36%, closing billion-dollar loophole
S. 2781 — Protecting Consumers from Unreasonable Credit Rates Act of 2025 · Filed by Richard Durbin (D-IL) · 2 cosponsors · Introduced Sep 11, 2025 · Referred to committee
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What it does
This bill caps all consumer credit interest rates and fees at 36% annually, closing loopholes that currently allow payday lenders, car title lenders, and banks to charge rates exceeding 300–17,000%. The cap applies to all charges—interest, late fees, overdraft fees, credit insurance—bundled into a single "fee and interest rate" calculation. It benefits borrowers trapped in predatory lending cycles; it harms high-cost lenders and financial institutions that profit from overdraft and payday products.
Why we flagged it
The bill's core function is a hard statutory ceiling on consumer credit rates, modeled on existing military lending protections. It is straightforward consumer protection legislation, not a tax provision, subsidy, or regulatory carve-out.
What the text implies
- Banks and fintech lenders may reduce or eliminate overdraft protection and small-dollar lending products, potentially pushing unbanked consumers toward unregulated alternatives or cash-only transactions.
- The 36% cap may compress credit availability for highest-risk borrowers; lenders may tighten underwriting or exit the small-dollar market entirely, reducing access even as rates fall.
The full analysis lists 5 implications of this text.
Who stands to gain
consumers (borrowers); consumer advocacy organizations