Broad Coalition Supports New Senate Bill to Cap Interest Rates for Loans

February 11, 2026 — Press Release

WASHINGTON – As the prospect of an interest rate cap has moved to the forefront of national public policy discussions, the National Consumer Law Center (NCLC) joined over 170 civil rights, consumer, and community groups and leaders in a letter endorsing the Predatory Lending Elimination Act. This new legislation, introduced by U.S. Senator Jack Reed (D-R.I.), would establish a permanent cap of 36% annual percentage rate (APR) on consumer credit including fees – covering credit cards as well as installment, car-title, and payday loans. The bill would extend the current law preventing lenders from charging military servicemembers above this limit to protect everyone in America from usurious loan rates.

“There is bipartisan consensus that we need a national interest rate cap to address the affordability crisis,” said National Consumer Law Center Associate Director Lauren Saunders. “At a time when predatory lenders are asking the Trump Administration to let them ignore state rate caps, a 36% national ceiling, including all junk fees, will stop the worst predatory lending while allowing states to set lower caps, especially for larger loans. Senator Reed’s bill will stop predatory lenders from dramatically increasing the price of basic necessities and help prevent borrowers from falling into a debt trap.”  

The Predatory Lending Elimination Act covers all types of lenders, including banks, and would eliminate predatory payday loans, auto-title loans, and similarly harmful, high-cost credit across the nation by:

• Closing loopholes and preventing hidden junk fees.
• Simplifying compliance by adopting a standard that lenders already understand and use: the rate cap for servicemembers that was established by the Military Lending Act, a bipartisan law enacted in 2006.
• Stopping lenders from using “rent-a-bank” schemes to charge triple-digit APRs.
• Establishing a simple, common-sense limit that has broad, bipartisan support from the public.
• Upholding the ability of states to adopt stronger protections as needed, such as lower rates for larger loans.
    

The Predatory Lending Elimination Act does not apply to residential mortgages, car purchase loans, or loans by federal credit unions. Federal credit unions are already subject to an 18% interest rate cap for most loans and a 28% cap for payday alternative loans.

Interest rate limits, also known as usury laws, are very popular with Republican, Democratic, and independent voters, date back thousands of years, and have been implemented around the world. Nearly all states and the District of Columbia currently cap rates for at least some consumer installment loans, depending on the size of the loan, and 21 states and D.C. prohibit high-cost, short-term payday loans. These caps are the easiest and most effective way to protect consumers from predatory, high-interest loans.

 Related Resources

• Report: Predatory Installment Lending in the States: How Well Do the States Protect Consumers Against High-Cost Installment Loans?, Dec. 19, 2025
• Brief: Comparing APRs on Small Loan Alternatives, Jan. 7, 2025
• Brief: Why Cap Interest Rates at 36%?, Aug. 4, 2021