The Wall Street Journal reports that California passed a new law to cap interest rates—currently at about 37% a year—for some consumer loans. OppLoans, however, is charging 160% on a typical loan in California, using a partnership with a Utah bank to continue selling in the state despite the new rules.
OppLoans isn’t the only lender charging triple-digit rates in California. The Wall Street Journal ran 25 online searches in February within the state for loans for a financially stressed borrower. The top results included several companies pitching consumer loans with rates over 100% to borrowers browsing from California.
OppLoans and its partner FinWise Bank are in what is called a rent-a-bank partnership, which allows high-cost lenders to skirt interest-rate caps in dozens of states. Rent-a-bank arrangements are the focus of a fierce battle pitting state regulators and consumer advocates against the credit industry.
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