The Consumer Financial Protection Bureau Wants to Hear from You About Payday Loans
the CFPB has proposed a rule that would require lenders to verify that a borrower has the ability to repay a loan
Whether it's to pay bills, cover an unexpected auto repair, or put food on the table—when cash is tight, many American families turn to payday loans and similar products to help them make ends meet. While these loans do offer fast cash to those who need it, they also often come with annual interest rates of more than 300 percent, on top of other fees.
For many people, these high-interest loans become debt traps.
Last month, the Consumer Financial Protection Bureau (CFPB) proposed a new rule that would require lenders to first determine whether or not a potential borrower can afford to pay back a loan before being approved.
The proposed rule would also cut off repeated attempts by lenders to debit consumer bank accounts for loan repayment—attempts that often rack up overdraft fees and make it even more difficult for consumers to get out of debt.
The protections proposed in the rule would apply to payday loans, auto title loans, deposit advance products, as well as certain high-cost installment loans.
The proposed rule is being formally published in the Federal Register today—and the CFPB wants your feedback! Public comments on the rule can be submitted online at Regulations.gov.
If you or someone you know has had an experience with payday loans or a similar loan product, share your experience with the CFPB. The agency is also seeking comments from consumer advocates, as well as from financial institutions that may be affected by the proposed rule.
The CFPB says that it will carefully consider all comments and perspectives prior to issuing a final rule. The deadline for submitting comments is October 7, 2016.