Small-Dollar Loans: How the Latest Rules from the CFPB Are Likely to Harm Millions of Consumers
The Consumer Financial Protection Bureau (CFPB) has issued its proposed rule for “Payday, Vehicle Title, and Certain High-Cost Installment Loans.” The proposal is open for public comments until October 7, 2016. The rule covers loans with a term of 45 days or less, as well as some loans with a term greater than 45 days, provided that they (1) have an “all-in” annual percentage rate greater than 36 percent; and (2) either are repaid directly from the consumer’s account or income or are secured by the consumer’s vehicle. The rule identifies it as an abusive and unfair practice for a lender to make such a loan without first reasonably determining that the consumer has the ability to repay the loan. The proposed rule is written in a manner that will likely force many lenders to stop offering these small dollar loans.
Watch this video to hear from Senator David Vitter (R-LA), Bill Himpler (Executive Vice President, American Financial Services Association), Doyle Bartlett (Co-Founder, The Eris Group), Andrew Morrison (Executive Vice President and Director, Brundage Management Company, Inc.), and Heritage Foundation Financial Regulations Expert Norber Michel and learn more.