Loan rate caps are a bad idea

Recently, an initiative by an activist group seeking to cap annual interest rates on consumer loans at 36% failed to make the ballot in Michigan. Despite claiming to collect more than 575,000 signatures and submitting nearly 400,000 of them to the Secretary of State’s office, the Bureau of Elections concluded that fewer than 275,000 were valid – well below the 340,047-signature threshold needed to put the question on the ballot.

This is good news for Michigan consumers, especially those who have difficulty accessing credit and thus rely on alternative financial services to make ends meet when an emergency expense arises. It’s also good news for the many consumers who can access credit and use alternative financial services because they’re faster easier and more efficient than what are considered “traditional” loans.