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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.

Mike Godbe

Associate at Hawks Quindel
Attorney Michael Godbe fights for individuals to be treated fairly in the workplace and in the marketplace. He is an Associate Attorney at Hawks Quindel and splits his practice between employment law and consumer protection. His employment law practice centers on employment discrimination and employee rights under the Family Medical Leave Act, and his consumer protection practice covers a range from debt collection harassment and unlawful “robocalls” to auto sale fraud and unlawful repossessions. Attorney Godbe has represented individuals in Federal and State court, as well as in small claims court.