Interest rate limits are the simplest and most effective protection against predatory lending. Since the time of the American Revolution, states have limited interest rates to protect their residents. American voters strongly support interest rate caps. At least 45 states and the District of Columbia (DC) cap rates on at least some installment loans.
But high-cost lenders are increasingly using rent-a-bank schemes with a small number of rogue banks, which are not subject to state interest rate limits, to evade state rate caps on installment loans and lines of credit. Check out our Take Action page to see what you can do to help fight rent-a-bank lending!
Rent-a-bank schemes are of questionable legality. Lenders pick and choose where they lend, generally avoiding states that vigorously enforce their laws. At least 10 high-cost consumer lenders (American First Finance, Axcess Financial, Check Into Cash, CURO, EasyPay, Elevate, Enova, LoanMart, OppFl, PersonifyFinancial) are using five FDIC-supervised banks (Community Capital Bank, FinWise Bank, First Electronic Bank, Republic Bank & Trust (Kentucky), TAB Bank) and one OCC-supervised bank (Stride Bank) to make high-cost rent-a-bank loans to consumers. Others, including World Business Lenders and OCC-supervised Axos Bank, are targeting small businesses.
See below to learn about the banks and lenders teaming up to issue triple-digit interest, debt-trap loans in states that do not allow high-cost loans — and which states they avoid. Find your state on the maps below or in this spreadsheet to see how many “rent-a-bank” lenders are attempting to avoid rate caps in your state.
Elevate’s Rise uses FDIC-supervised FinWiseBank (Utah) and Capital Community Bank (Utah) to make installment loans of $500 to $5,000 with APRs of 99% to 149% in several states that do not allow those rates for some or all loans in that size range. Rise also lends directly in a number of other states.
*Elastic’s website no longer discloses where the line of credit is available, but Elastic is no longer available in the District of Columbia as a result of litigation, and its FAQs previously noted that it was not available in 11 states: Colorado, Connecticut, Georgia, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Vermont, and West Virginia. Elastic was, and probably still, is available in many states that may not permit effective APRs as high as 109% on some or all lines of credit.
Enova’s NetCredit uses FDIC-supervised Republic Bank & Trust (Kentucky) to make installment loans of $2,500 to $10,000 with APRs up to 99.99% in states that do not allow those rates on some or all loans in that size range.
- Sample NetCredit/Republic Bank & Trust loan: NetCredit’s website for Montana (where voters capped rates at 36%) gives an example of a $4,500 loan at 65% APR repaid with 50 monthly payments of $262.53 — for a total of $13,126.50. This example shows how high-rate loans above what states allow can balloon even when the rate is not in the triple digits.
OppFi uses FDIC-supervised FinWise Bank (Utah) and First Electronic Bank, a Utah industrial bank, to make installment loans of $400 to $4,000 at 160% APR in a number of states that do not allow that rate for some or all loans in that size range. OppFl also lends directly in several states.
- Sample OppFi/FinWise Bank loan: A $3,000 loan at 160% APR for 12 Months. 12 Payments of $514.60 each for a total of $6,175.20
Wheels Financial Group, LLC dba LoanMart (under the ChoiceCash brand) uses FDIC-supervised Community Capital Bank (Utah) to make auto-title loans in several states, most of which restrict or disallow high-cost auto title lending. A sample loan formerly on LoanMart’s website was a 3-year, $3,000 loan at 170% APR with 36 monthly payments totaling $15,431.04. LoanMart also makes auto-title loans directly in a number of states. LoanMart does not operate in other states.
Applied Data Finance, doing business as Personify Financial uses First Electronic Bank, an FDIC-supervised industrial bank chartered in Utah (and owned by Fry’s Electronics), to enable installment loans of $500 to $10,000 with APRs as high as 179.99% in several states that do not allow that rate for some or all loans in that size range. Personify also lends directly in a number of states.
EasyPay Finance offers high-cost credit through businesses across the country that sell auto repairs, furniture, home appliances, pets, wheels, and tires, among other items. EasyPay’s website does not disclose its rates, but examples from consumers in some states include $1,500 loans at 188.99% APR. EasyPay extends credit through FDIC-supervised Transportation Alliance Bank dba TAB Bank (Utah) in several states, that may not allow that rate. EasyPay’s website states that it administers financing directly in other states, other than in New York, most likely under state lending or retail installment sales laws.
Axcess Financial (whose brands include the payday lenders Check ‘n Go and Allied Cash Advance) offers the Xact installment loan through FDIC-supervised Capital Community Bank. The loans range from $1,000 to $5,000. Rates range from 145% APR to 199% APR. Xact loans are offered in several states that do not allow installment loans at those rates. Axcess Financial’s Check ‘n Go also directly offers high-cost installment loans in several other states.
CURO, which offers payday loans and high-cost installment loans through various brands including Speedy Cash and Rapid Cash, has launched two rent-a-bank lenders, Avío Credit and VergeCredit. Both use OCC-regulated Stride Bank. Avío offers online installment loans up to 130% APR and lines of credit. Verge Credit makes installment loans up to 179% APR. Both are in a few states now and are expanding. Curo has told investors that the Stride Bank program “will help us expand geographically, online and in some states where we — where we don’t operate right now.”
American First Finance offers secured and unsecured installment loans through FinWise Bank for purchases at retailers including furniture, appliances, home improvements, pets, veterinarian services auto and mobile home repair, jewelry, body art. A sample loan is a $5,000 loan with 104 weekly payments of $154.92, including 145% interest and a $250 origination fee, which is about 161% APR. The website does not disclose in what states AFF lends, but lawsuits and complaints indicate loans in states including North Carolina and Rhode Island.
Small Business Rent-a-Bank Lending
World Business Lenders (WBL) uses a rent-a-bank scheme to make small business loans, often secured by the small business owner’s home. WBL’s website does not disclose where it lends directly and where it uses a rent-a-bank scheme. But lawsuits in Colorado, Connecticut, Florida, Georgia, Massachusetts, and New York have described rent-a-bank mortgages of $20,000 to $550,000, usually secured by the business owner’s personal residence with APRs of 75% to 139% or higher. World Business Lenders currently uses OCC-supervised Axos Bank (previously known as Bank of Internet), a federal savings association and previously used FDIC-supervised Bank of Lake Mills (Wisconsin) to attempt to evade state rate caps. World Business Lenders has been profiled for its predatory practices.
- Fact Sheet: Stop Payday Lenders Rent-a-Bank Schemes