Consumer Financial Protection Bureau Asked to Step In and Make Payday Loans Fair for All
There’s been a lot of talk about the Consumer Financial Protection Bureau in recent weeks. On one side you have 46 Republicans, including Senator Ted Cruz, who want to put an end to the bureau. They claim that more regulations on banks is stunting the economy’s growth. On the other hand, there are low-income families and their supporters who want the CFPB to continue fighting for the consumer, including the creation of stricter rules to make payday loans fair for all.
The CFPB Steps Up
In July, the CFPB listened to borrowers and announced they were going to start cracking down on payday loan companies. The goal is not to outlaw the loans, instead they want companies to start weighing a borrower’s ability to repay the loan amount requested. The bureau wants companies to limit the number of times consumers can roll their payday loan into a new one. They also want companies limit the amount they loan to consumers. These are all common sense things, but in the payday loan industry, some states lack laws that limit interest rates and fees. In fact, there are many places where the annual interest rates on a cash advance loan can be 400 or 500 percent.
In recent years, the CFPB has provided as much as $248 million in relief to payday loan borrowers who failed to understand what they were getting into or who were told they’d finished the application process when they do not believe they had. ACE Cash Express is one company who was fined $5 million for illegal debt collection practices. Cash America was fined $14 million for failing to review documents before signing them, and they also destroyed documents to prevent CFPB from reviewing them.
If you’re considering a payday loan, it’s important that you understand the terms, especially when it comes to the repayment terms. If you’re not completely certain of the repayment date and fees that must be paid, ask questions. If the lender is unwilling to answer the questions to your satisfaction, find a different payday loan company.