American Financial Services Association

New South Dakota Law Clears Up All-In Rate Cap Confusion

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New South Dakota Law Clears Up All-In Rate Cap Confusion

PIERRE, S.D. – The American Financial Services Association (AFSA) applauds the South Dakota legislature and Governor Dennis Daugaard for its unanimous passage in both houses this month of HB 1090 which brings clarity for consumers and financial institutions following the recently-enacted all-in rate cap in Initiated Measure 21.

Initiated Measure 21 was aimed at tackling problems associated with predatory payday and title lenders, but unfortunately created some confusion among non-payday sources of consumer credit in the state.

The Legislature decided Initiated Measure 21’s broad “all-in” APR needed clarification in order for legitimate, non-payday, beneficial lenders to continue to operate in the state.

“HB 1090 clarifies the all-in rate cap’s impact on other regulated sources of consumer credit, due to potentially broad interpretations of the measure that would not have allowed predictability in consumer contracts,” said Danielle Fagre Arlowe, AFSA’s Senior Vice President of State Government Affairs.

“HB 1090 merely clarifies what constitutes “all-in” and what does not, which allows financial institutions to properly comply with South Dakota law,” she said.

HB 1090 brings the definition of “incident to the extension of credit” more in line with the federal Truth in Lending Act and Regulation Z, so that creditors can accurately calculate a loan’s interest rate and comply with the law’s provisions throughout the term of the loan. South Dakota remains the only state to calculate “APR” differently than TILA.

Based in Washington, D.C., the American Financial Services Association (AFSA), celebrating its centennial in 2016, is the national trade association for the consumer credit industry, protecting access to credit and consumer choice. Its 400 members include traditional installment lenders, vehicle finance/leasing companies, consumer and commercial finance companies, mortgage lenders and servicers, payment card issuers, industrial banks and industry suppliers. For more information, visit

March 20th, 2017 by