When you apply for a new credit card or decide to take out a loan, you read the fine print or at least you’re supposed to read the fine print. You probably check the interest rate and the fee schedule, and then let your eyes fall on the rest.
But before you sign on the next dotted line, you might want to run a quick CTRL + F for a key term on your loan agreement: “Iowa”.
Yes, the state. Turns out, Iowa has some of the toughest consumer protection laws when it comes to lending and crediting.
The state’s 70-page consumer credit code is in part due to what one Reddit user described as “our badass attorney general” Tom Miller. This guy was Iowa Attorney General from 1979 to 1991 and again from 1995 to in fact at present. The state had consumer-friendly loan laws in place long before it was cool during the last recession.
So if you see a loan or credit agreement that says the offer isn’t available in Iowa, it means there’s something in that fine print that doesn’t jive with Iowa’s consumer protection laws.
A quick rundown of a few highlights:
Iowa has strict limits on payday loans, per the Des Moines Register.
For example, lenders cannot issue more than $ 500 in loans to one person at a time. They also can’t charge more than $ 15 on the first $ 100 loaned, and then no more than $ 10 for every additional $ 100.
In 2007, Iowa imposed a 21% interest rate cap on car title loans to avoid predatory APRs on these short term loans.
The rules are so strict, William Charles explained to Doctor of Credit, which some financial institutions don’t want to bother lending to Iowa residents.
Due to the strict laws in Iowa, customers are not as profitable for card issuers. Most take this on the chin, but some … decided to ban residents in protest.
Charles wrote this post in 2014, when consumers couldn’t understand why Iowa residents couldn’t apply for the Barclay Arrival Card. (This card was recently deleted.)
But there are also more recent examples. You want to pay for your Peloton or Walmart.com purchase in installments via To affirm? You can’t, if you live in Iowa.
If a lender excludes Iowa in its fine print, that doesn’t mean they’re hiding a terrible secret about their plans to rip you off. It just means their terms aren’t as friendly as Iowa requires.
Finding that little note in a loan agreement should prompt you to reread the document before signing. Understanding the terms of engagement now can save you headaches down the road.