Sunday, December 2, 2007

The Quietly Changing State Interest Rate Limits

While reviewing Prosper's state lending limits to see if everyone had bumped up to 36%, I noticed that some of the values had drifted a bit from the last officially announced state limit change back in May. At the time, I did not capture all the rates (only the new ones), so I do not have a complete picture. Prosper, being the wily data hiders that they are, have blocked Google and the Way Back Machine from caching the page, so I can only work with the data that I have.

There are some changes of note based on the limited information available, however. And, to get around that data hiding goodness, I've listed all the state information for future reference.

State
Current Rates
Old Rates
Alabama
$2k - $25k @ 36%

Alaska
$1k - $25k @ 16%

Arizona
$1k - $10k @ 24%
$10k - $25k @ 36%

Arkansas
$1k - $25k @ 10.25% APR
$1k - $25k @ 11.25% APR
California
$1k - $2.5k @ 19.2%
$2.5k - $25k @ 36%

Colorado
$1k - $25k @ 21% APR

Connecticut
$1k - $25k @ 12% APR

Delaware
$1k - $25k @ 10.25% APR
$1k - $25k @ 11.25% APR
DC
$1k - $25k @ 6% APR

Florida
$1k - $25k @ 18% APR

Georgia
$3k - $25k @ 36%

Hawaii
$1k - $25k @ 12% APR

Idaho
$1k - $25k @ 36%

Illinois
$1k - $25k @ 36%

Indiana
$1k - $25k @ 21% APR

Iowa
$1k - $25k @ 21% APR

Kansas
$1k - $10k @ 21% APR

Kentucky
$1k - $15k @ 9.25% APR
$15k - $25k @ 36%
$1k - $15k @ 10.25% APR
$15k - $25k @ 30%
Lousiana
$1k - $25k @ 12% APR

Maine
$1k - $4k @ 24% APR
$4k - $25k @ 18% APR

Maryland
$6k - $25k @ 24% APR

Massachusetts
$1k - $6k @ 12% APR
$6k - $25k @ 20% APR

Michigan
$1k - $25k @ 25%

Minnesota
$1k - $2.5k @ 19.2%
$2.5k - $25k @ 36%

Mississippi
$1k - $25k @ 36%
(Business Only)
$1k - $25k @ 30%
(Business Only)
Missouri
$1k - $7.5k @ 36%

Montana
$1k - $25k @ 36%

Nebraska
$1k - $25k @ 16%

Nevada
-None-

New Hampshire
$1k - $10k @ 10% APR
$10k - $25k @ 36%

New Jersey
$1k - $25k @ 16% APR

New Mexico
$2.5k - $25k @ 36%

New York
$1k - $25k @ 16%

North Carolina
$1k - $25k @ 36%
(Business Only)
$1k - $25k @ 30%
(Business Only)
North Dakota
$1k - $25k @ 36%
None
Ohio
$1k - $25k @ 25%

Oklahoma
$1k - $25k @ 21%

Oregon
$1k - $25k @ 36%

Pennsylvania
$1k - $25k @ 6%

Rhode Island
-None-

South Carolina
$1k - $25k @ 12% APR

South Dakota
-None-

Tennessee
$1k - $25k @ 11.75% APR
$1k - $25k @ 12.25% APR
Texas
$1k - $25k @ 10% APR
$1k - $25k @ 18% (business)

Utah
$1k - $25k @ 36%

Vermont
$1k - $4k @ 18% APR

Virginia
$1k - $25k @ 12%

Washington
$1k - $25k @ 25%

West Virginia
$1k - $25k @ 18% APR

Wisconsin
$1k - $25k @ 18% APR

Wyoming
$1k - $25k @ 21% APR

Arkansas, Delaware, Kentucky, and Tennessee had minor decreases in their rates. These are not large moves and should have a minor effect on loan volumes. Mississippi and North Carolina had their business only restrictions removed which is a big deal since these states have a 36% rate cap. (Update: As Prosper Andrew pointed out, I can't read). Also on the benefit side is a pickup of North Dakota, though this is of limited practical benefit. There are not many people in North Dakota.

There's also an interesting note on DC (District Of Columbia). Even though Prosper now has the license to issue loans up to 24% APR, they're not doing it yet. I'll be watching this.

Update: Prosper Andrew has pointed out in the comments that I can't read, the states with the 1% shift tie their rates to the fed rate, and that DC has some weird regulations that aren't quite compatible with Prosper's business model.

2 comments:

Andrew said...

Hi Mike - Andrew from Prosper (Wily Data Hiders, Inc.) here. Most of the rate decreases are due to the fact that those states' lending limits (AR, DE, KY, TN) are tied to the fed's rates. So as the fed has cut rates lately, we've also had to adjust downwards. Expect future movements in those states' caps as the fed continues to move rates.

As for North Dakota, we were issued a license to lend in that state (so now we do). In NC and MS, the business-only restrictions have not actually been removed (as you stated).

In DC, there are some tricky details about how DC allows lenders to charge borrowers origination fees that don't jive with how Prosper has traditionally charged them. So although we have a license to lend up to 24%, we won't be able to raise the cap until our system complies with all of the regulations in DC.

As for our decision to hide our state rate caps page from Google and other search robots, it was actually less of a malicious attempt to hide content as it was a move to increase visibility to our main pages (like home, borrow, lend, etc.) for search engines rather than our ancillary stuff (legal, etc.).

That's also a helpful explanation for why we don't necessarily issue press releases on little things like state rate cap changes - 1) it's not that interesting, 2) it's really only relevant to borrowers at the point of creating their listing, and 3) it would dilute the value of other messages that truly are unique and valuable about Prosper. I guess it's all debatable, but that's the rationale behind our decisions. Thanks for the post, though, and the feedback.

Tom said...

Mike - nice find.

Andrew - thanks for the clarification and all the additional information.