On November 8, voters in South Dakota approved Initiated Measure 21, which prohibits certain state-licensed money lenders from making a loan that imposes total interest, fees, and charges at an all-in annual percentage rate greater than 36%. The rate cap includes all charges for ancillary products or services and any other charge or fee incidental to the extension of credit. The rate cap applies to commercial and personal loans, and will apply to all loans made after the election results are certified (likely no later than November 16, 2016). The measure does not apply to state and national banks, bank holding companies, other federally-insured financial institutions, and state-chartered trust companies. The measure also does not apply to businesses that provide financing for goods and services they sell.
In addition, South Dakota voters rejected proposed Constitutional Amendment U, which would have placed an 18% cap on interest rates for loans, unless the borrower agrees to a higher interest rate in writing. The amendment would have also provided that any law setting an APR cap on loans is not valid unless the law provides borrowers the right to contract at higher interest rates.