State investigating short-term lender's new loan product

PIERRE, S.D. (AP) - The South Dakota Division of Banking says it's investigating whether a short-term lending company's new loan product complies with an interest rate cap passed in 2016.

The division said Tuesday that Dollar Loan Center is offering short-term loans in Rapid City and Sioux Falls with a 36 percent annual interest rate, but charging late fees if they're not repaid in one week.

Voters last year limited interest rates to 36 percent annually. The law caused many short-term lenders to leave South Dakota.

Dollar Loan Center CEO Chuck Brennan said in a statement to the Argus Leader that the new loan product conforms to the voter-approved measure.

Democratic Sen. Reynold Nesiba, who helped lead the rate cap campaign, says the product violates the spirit of the law and is a move to evade the cap.