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Limón and Grayson Introduce Interest Rate Cap on Predatory Loans

For immediate release:

(Sacramento, CA) - Today, Assemblymember Monique Limón (D-Santa Barbara), joined by fellow Assembly Banking Committee member Tim Grayson (D-Concord), introduced AB 539 which places an interest rate cap on consumer loans of $2,500 - $10,000. AB 539 comes in response to the growing threat of predatory lending practices that entrap financially vulnerable families in unaffordable loans that they cannot repay.

“Over the past decade, the rise of high-cost lending has proliferated in California. These triple-digit loans – where annual interest rates on longer-term loans exceed 100% - expose California consumers to the risks of devastating financial consequences, including damaged credit, wage garnishments, bank account levies, and car repossessions,” said Assemblymember Limón. “For too long the state legislature has left this market unchecked, and now 100,000 borrowers, or approximately one out of three, default on these loans each year, even while predatory lenders bring in more than a billion dollars of annual revenue.”

“Californians deserve real access to capital, not exploitative loans that trap them in perpetual payments and compounding debt,” said Assemblymember Grayson. “We must do more to protect financially vulnerable, hardworking families from predatory lenders who profit off their devastation. And that starts with ending the worst kinds of abusive loans in our state.”

Specifically, AB 539 would institute an interest rate cap of 36% plus the federal funds rate on loans of $2,500 - $10,000. This rate cap ensures a sustainable lending environment for both borrowers and responsible lenders by incentivizing lenders to underwrite loans and offer products that fit within a borrower’s monthly budget.

“With the uncertainty provided by the California Supreme Court ruling in the CashCall case and the looming threat of a potential ballot initiative, the status quo is not sustainable for responsible lenders in our state either. AB 539 provides regulatory clarity that will allow responsible lenders to flourish in California,” said Limón. “Healthy credit markets are built on the foundation that lenders underwrite loans to borrowers who have a reasonable ability to repay them, and this bill will preserve access to affordable credit options for California consumers.”

AB 539 would put California in line with 39 other states that cap interest rates on these loans. The proposed interest rate cap reflects a compromise between consumer advocates and responsible lenders with the goal of establishing a sustainable marketplace where both lenders and borrowers can thrive.


Tim Grayson represents the 14th Assembly District that includes the communities of Benicia, Concord, Clayton, Martinez, Pleasant Hill, Vallejo, Pittsburg and Walnut Creek. For more information please visit the Assemblymember’s website,