American consumers need strong protections from unfair, deceptive or abusive practices in the payday and small-dollar lending markets. CRL joined Americans for Financial Reform and more than 100 other organizations to urge Richard Cordray, Director of the Consumer Financial Protection Bureau, to pass a broad rule, warning that an overly narrow rule could result in an even deeper debt trap.
Payday, car-title, and similar high-cost loans, typically with interest rates of 100% APR and higher, trap people in crippling long-term debt. CRL advocates for regulators to require lenders to verify borrowers can afford to repay a loan before that loan is issued. CRL also advocates for interest rate caps of no higher than 36% APR and for enforcement of current usury laws.
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Joint research from CRL and the Consumer Federation of America finds that car-title loans—small-dollar loans secured by the title to a vehicle owned outright—cost U.S. consumers $3.6 billion a year in interest on $1.6 billion in loans. Read the Full Report Read the Executive Summary These products share many of payday loans' predatory features: triple-digit interest rates, balloon payments at the end of the loan's term, and—critically—a failure by the lender to evaluate a borrower's ability to repay. Car-title loans also produce the same effect that payday loans do: A debt trap that leaves too...
Some 250 advocates urged four federal regulators to end the predatory practice of bank payday lending on February 22, 2012. The CFPB, OCC, FDIC and Federal Reserve Board can and should stop Wells Fargo, US Bank, Fifth Third Bank and Regions Bank from trapping their customers in long-term debt at 400% annual interest. The Honorable Ben S. Bernanke Chairman Board of Governors, Federal Reserve System 20th Street and Constitution Avenue, NW Washington, DC 20551 The Honorable Richard Cordray Director Consumer Financial Protection Bureau 1500 Pennsylvania Ave. NW Washington, DC 20220 Mr. Martin...
Consumer groups fear OCC proposed guidance may legitimize and facilitate the spread of payday lending by national banks, and banks would continue abusive overdraft practices—harming bank customers, undermining state payday loan laws, and weakening the long-term safety and soundness of financial institutions.
Press Release Full Pollster's Report A brief poll conducted in November 2010 to guage public opinion of a potential moratorium and other land-use restrictions on paydy lenders in San Jose found that most voters hold an unfavorable view of payday lending; many would like to see stronger restrictions on payday lenders and most believe that the City of San Jose should regulate payday lenders where possible. According to the Poll Payday loan stores start with a bad reputation. Fifty-two (52%) percent of voters hold an unfavorable view of them. This is higher than the unfavorable ratings of both...
This color-coded map of payday stores by household reveals a disturbing pattern. Southern states are among the most targeted for these high-cost, low-dollar loans.
Download the complete report >> (PDF, 31 pp.) Download the executive summary >> (PDF 4 pp.) Watch our 2 minute video press release on Phantom Demand Leslie Parrish discusses the findings in this 9 minute webinar A full three quarters of loan volume of the payday lending industry is generated by borrowers who, after meeting the short-term due date of the loan, must re-borrow before their next pay period Repeat borrowing of what is marketed as a short-term loan of a few hundred dollars has long been documented, but this report verifies for the first time how quickly most payday lending customers...
Payday Lenders Set Up Shop in African-American Neighborhoods Neighborhoods with many African-American families house more than their share of predatory payday loan shops. View maps that show where payday shops are located relative to minorities in your part of the state. While the payday lending industry frequently describes its typical customer in detail, discussion of race is noticeably absent. This report corrects that omission. Our analysis of North Carolina neighborhoods reveals a powerful relationship between the proportion of African-Americans in a neighborhood and the prevalence of...