CFPB Payday Loan Rules
June 2, 2016 by staff
CFPB Payday Loan Rules, Lenders who offer payday loans and other small-dollar advances would have to assess whether borrowers could afford and repay the debts, according to a federal rule set to be proposed Thursday.
The long-awaited Consumer Financial Protection Bureau proposal would also cut off repeated debit attempts that hit overdue borrowers with additional fees and charges as lenders seek repayment.
The regulator also launched an inquiry into other high-risk loans and practices not covered by the new proposal, including open-end lines of credit and methods lenders may use to seize borrowers’ wages, vehicles or other personal property.
The rule proposal followed a 2014 CFPB study that found roughly 62% of all payday loans – often due within two weeks and carrying an annual interest rate of approximately 390% – go to consumers who repeatedly extend their repayments and ultimately owe more in fees than what they initially borrowed.
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