The following statement is about the rule finalized today by the Consumer Financial Protection Bureau (CFPB) that requires payday and car title lenders to determine a borrower’s ability to repay before issuing a short-term loan like a payday or title loan.
This common-sense rule is desperately needed to limit the number of people trapped in an endless cycle of debt for profit by predatory lenders.
In Alabama, one of the poorest states, we have repeatedly seen consumers facing tough economic times turn to these predatory lenders to pay for food, rent, utility bills and other basic needs only to discover, after it’s too late, that they owe more money than they can pay back.
It’s time to end the debt trap. This rule is a positive step in protecting borrowers from the worst abuses, but we will continue working for comprehensive reform and interest rate limits.
The final CFPB rule can be viewed here.