The federal Consumer Financial Protection Bureau was created to protect people from predatory lending practices. However, under the Trump administration, the CFPB is now proposing to gut important consumer protections from the 2017 Payday Loan Rule, putting the interests of unscrupulous lenders over our families.
Please tell the Trump administration not to repeal regulations that protect low-income borrowers!
In 2017, after conducting extensive research on storefront loans and payday lending, the CFPB finalized regulations to protect people from some of the worst predatory lending practices. The 2017 Payday Rule, scheduled to go into effect this August, mandates that lenders assess a borrower’s ability to repay a loan as a condition of making high cost title and payday loans.
Trump’s CFPB is proposing to revoke this protection that requires lenders to only provide loans that can be repaid, prioritizing the profits of payday and car title lenders over the consumers the agency was created to protect.
The storefront lending industry is built on making loans that borrowers cannot afford to repay. Payday lenders encourage borrowers to rollover their loans and take on more debt when they cannot make payments.
The debt trap is still common in New Mexico even though the state no longer permits short term loans. Instead, in our state lenders trap families in longer term debt at rates as high as 175% APR. Many payday lenders are national corporations that do business in New Mexico.
The 2017 Payday Rule should be implemented as it was originally written.
Protect the rights of consumers to fair loans by submitting your public comment!
Information on submitting your comments and suggested content is below.
Submit your comment here: https://www.federalregister.gov/documents/2019/02/14/2019-01906/payday-vehicle-title-and-certain-high-cost-installment-loans’
The deadline is May 15, 2019.
To maximize its impact, make sure at least a third of your comment is original text; otherwise, the CFPB might not consider it a valid comment. It is most important to note how high cost loans are harmful in our state, even if your comment is very brief.
Content to consider in your comment:
The 2017 CFPB Payday Rule is vital in stopping the debt trap of payday lending.
- Requiring payday and car title lenders to assess whether customers can afford to pay loans back before entering into a contract is a commonsense foundation of responsible lending.
- Payday lenders will stop at nothing to prevent this reasonable requirement because they want to perpetuate their business model that is driven by trapping people in longterm debt.
- The CFPB says that repealing the Payday Rule will be a “benefit” to payday lenders, but it will directly harm consumers who are stuck with unaffordable loans.
- Rescinding the 2017 Payday Rule ignores extensive public comment and a wealth of research on the dangers of unregulated payday borrowing conducted by the CFPB itself.
- The debt burden of payday loans forces families to choose between paying their bills or face ever-growing fees including overdraft fees, closed bank accounts, and even bankruptcy.
- For car title loan borrowers, there is a huge risk that a family will lose their vehicle – frequently a low-income household’s sole means of getting to work, school, or medical appointments.
The proposal will hurt low-income borrowers.
- In name, payday loans are not allowed in New Mexico. In reality, longer term installment loan products have taken their place, extracting just as many resources from cash-strapped families regardless of what they can afford.
- Most storefront lenders in New Mexico operate in multiple states. Allowing the 2017 Final Rule to go into effect as planned will create a norm for the storefront lending industry that will help New Mexicans who take out loans from multi-state lenders and could support the development of similar consumer protections in New Mexico state law.
The CFPB should both implement the 2017 Payday Rule, and also study the impact of similar protections on longer-term loans to protect consumers across the country from predatory debt trap practices.