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Late Fees on Many Loans Over $10 are Often Illegal in Wisconsin

Do you have a car loan? How about a payday loan or title loan? Were you ever late making a payment? If so, you probably received a late fee (aka a delinquency charge).

If that late fee was greater than $10, then your lender may be violating Wisconsin law.

Wisconsin Consumer Credit Transactions Defined

The Wisconsin Consumer Act (Wis. Stat. § 421 through 429) defines the rules for consumer credit transactions made in Wisconsin. A “consumer credit transaction” is:

  • a loan, lease or sale,
  • made primarily for a personal, family or household purpose (i.e. not for business purposes),
  • payable in installments OR where a finance charge is or may be assessed.
  • Lastly, the amount financed must be less than $25,000.

Common types of consumer credit transactions include most car loans, other title loans, and cash advance or payday loans.

Late Fees on Consumer Credit Transactions

If you have a car loan or another consumer credit transaction that meets the requirements above, Wisconsin lenders cannot charge you late fees greater than $10.

Wis. Stat. § 422.203 defines the maximum charge for a delinquency charge or late fee:

With respect to a consumer credit transaction other than one pursuant to an open-end credit plan, the parties may agree to a delinquency charge on any installment not paid in full on or before the 10th day after its scheduled or deferred due date in an amount not to exceed $10 or 5 percent of the unpaid amount of the installment, whichever is less.

What does this mean for those who have Wisconsin payday loans, title loans or similar debts?

  • First, late fees on applicable consumer credit transactions cannot be greater than $10.
  • Second, lenders cannot charge a late fee until the 11th day the payment is late.
  • Third, this rule does not apply to “open-end” credit plans such as credit cards, overdraft privileges on checking accounts, and home equity lines.

Call us at 608-257-0040 today for a free consultation if you believe your lender may be violating Wisconsin loan laws. After our intake team gets your basic information, we’ll schedule a phone call or in-person meeting during which one of our consumer protection attorneys will listen to your story and help you determine if you have a strong legal case.

Nicholas Fairweather

Shareholder at Hawks Quindel, S.C.
Nicholas E. Fairweather is a Shareholder in our firm’s Madison office. He has represented labor unions and Wisconsin employees, focusing his practice on employment, labor, and consumer rights litigation.