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In 2014, hunger drove Michelle Warne of Green Bay to take out a loan from a local Check ‘n Go. “I had no food in the house at all,” she said. “I just couldn’t take any more.”

Over the next two years, the retiree paid off that loan. But she took out a second loan, which she has not paid off completely. That led to more borrowing earlier this year — $401 — plus $338 to pay off the outstanding balance. According to her truth-in-lending statement, paying off this $740 will cost Warne $983 in interest and fees over 18 months.

Warne’s annual interest rate on her so-called installment loan was 143 percent. That is a relatively low rate compared to payday loans, or small amounts of money borrowed at high interest rates for 90 days or less.

In 2015, the average annual interest rate on payday loans in Wisconsin was nearly four times as high: 565 percent, according the state Department of Financial Institutions. A consumer borrowing $400 at that rate would pay $556 in interest alone over about three months. There could also be additional fees.

Wisconsin is one of just eight states that has no cap on annual interest for payday loans; the others are Nevada, Utah, Delaware, Ohio, Idaho, South Dakota and Texas. Payday loan reforms proposed last week by the federal Consumer Financial Protection Bureau would not affect maximum interest rates, which can be set by states but not the CFPB, the federal agency that focuses on ensuring fairness in borrowing for consumers.

“We need better laws,” said Warne, 73. “Because when they have something like this, they will take advantage of anybody who is poor.”

Warne never applied for a standard personal loan, even though some banks and credit unions offer them at a fraction of the interest rate she paid. She was positive a bank would not lend to her, she said, because her only income is her Social Security retirement.

“They wouldn’t give me a loan,” Warne said. “Nobody would.”

According to the DFI annual reports, there were 255,177 payday loans made in the state in 2011. Since then, the numbers have steadily declined: In 2015, just 93,740 loans were made.

But numbers after 2011 likely understate the volume of short-term, high-interest borrowing. That is because of a change in the state payday lending law that means fewer such loans are being reported to the state, former DFI Secretary Peter Bildsten said.

Questionable reporting

In 2011, Republican state legislators and Gov. Scott Walker changed the definition of payday loan to include only those made for 90 days or less. High-interest loans for 91 days or more — often called installment loans — are not subject to state payday loan laws.

Because of that loophole, Bildsten said, “The data that we have to gather at DFI and then report on an annual basis to the Legislature is almost inconsequential.”

State Rep. Gordon Hintz, D-Oshkosh, agreed. The annual DFI report, he said, “is severely underestimating the loan volume.”

Hintz, a member of the Assembly’s Finance Committee, said it is likely many borrowers are actually taking out installment loans that are not reported to the state. Payday lenders can offer both short-term payday loans and longer-term borrowing that also may carry high interest and fees.

“If you go to a payday loan store, there’s a sign in the window that says ‘payday loan,’ ” Hintz said. “But the reality is, if you need more than $200 or $250, they’re going to steer you to what really is an installment loan.”

There are probably “thousands” of high-interest installment loans that are being issued but not reported, said Stacia Conneely, a consumer lawyer with Legal Action of Wisconsin, which provides free legal services to low-income individuals. The lack of reporting, she said, creates a problem for policymakers.