Weigh In on Proposed Regulations for Payday Lending!
The payday and auto-title lending industry has long plagued Indian Country by charging high interest and fees on loans when there are limited alternatives in and around Native communities. The Consumer Financial Protection Bureau (CFPB), a U.S. government agency created to protect consumers from unfair practices by financial institutions, has listened to the concerns of Americans across the nation, including Indian Country, and is planning to impose rules on payday, auto-title and high-cost installment lending. The agency will be accepting feedback on the proposed rules until October 7, 2016.
Let’s make sure the voice of Indian Country is heard prior to the deadline!
Payday loans are generally short-term loans carrying a national average of just under 400% APR (annual percentage rate) that require borrowers to repay lenders by their next paycheck. Similarly, auto-title loans usually expect consumers to pay off a loan within 30 days and hold an average APR of around 300% nationally. Research by the CFPB and others indicates that these loans with quick repayment demands and inordinately high interest and fees place consumers in a vicious debt cycle. Unable to pay off the loan by the short deadline, borrowers are forced to take out another loan, sticking them in a debt trap. Consumers are fed up with the industry, as a recent survey demonstrated that 71% of voters support bolstering the government’s regulation of payday lending (National Payday Lending Survey, 2016).
The CFPB’s proposed rules include the following provisions to protect consumers:
- Lenders must conduct a full payment test to determine a borrower’s ability to repay the loan
- Lenders to provide a principal-payoff option in some instances for consumers who cannot satisfy the full payment test for smaller loans
- Places limit on lenders’ number of debit attempts, as failed attempts result in significant fees
- Lenders must report and obtain information about loans using credit-reporting systems
To learn more about CFPB’s proposed changes follow this link. You can submit comments to the CFPB until October 7, 2016, by visiting www.stoppaydaypredators.org/CRL if you live in a state without any existing protections, and www.stoppaydaypredators.org/payday-free if you reside in a state with existing protections.
Make sure the concerns of Indian Country are heard!