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Payday and Other Small Dollar Loans

Payday and Other Small Dollar Loans

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.

Filter Results

Wednesday, April 6, 2022

Buy Now, Pay Later: No Free Pass from Consumer Protections

The exploding market of Buy Now Pay Later (BNPL) credit demands the same level of oversight that we give to credit cards. BNPL can help some borrowers spread out their payments, but entails real risks and costs, which is not clear in advertisements highlighting interest-free payments and “no impact” on credit scores. Regulation is necessary to protect consumers from hidden harms and costs to promote true financial inclusion. Online and in-store retailers now commonly offer BNPL plans, which allow consumers to make purchases in installments, typically four payments over six weeks. Lenders...
Policy & Legislation
Payday and Other Small Dollar Loans

Tuesday, April 5, 2022

Banks, Credit Unions and Consumer Groups Urge Congress to Close the Industrial Loan Company Loophole

A broad coalition of bank and credit union associations and consumer organizations submitted a letter to the U.S. House Committee on Financial Services urging passage of the bipartisan Close the ILC Loophole Act . The bill would help prevent more companies from running what is essentially a bank without the necessary regulatory oversight.
Letters to Congress
Payday and Other Small Dollar Loans

Monday, March 28, 2022

77 Groups Urge the CFPB to Supervise the 'Buy Now, Pay Later' Market

The group letter begins: The undersigned 77 consumer, housing, civil rights, legal services, faith, community, small business, student borrower, and public interest organizations appreciate the opportunity to comment on the CFPB’s inquiry into Buy Now, Pay Later (BNPL) credit products that are proliferating across market areas. We welcome the CFPB’s recent inquiry into Affirm, Afterpay, Klarna, PayPal, and Zip, however we remain alarmed by the lack of regulation of this exploding consumer credit product market. We urge the CFPB to view BNPL products as credit cards covered by the Truth in...
Comment Letter
Payday and Other Small Dollar Loans

Monday, March 28, 2022

CFPB Should Treat 'Buy Now, Pay Later' Products Like Credit Cards and Protect Consumers from Harmful Practices.

In response to the Request for Comments issued by the Consumer Financial Protection Bureau, the Center for Responsible Lending, the Consumer Federation of America, and the National Consumer Law Center (on behalf of its low-income clients) offer joint recommendations for further guidance and monitoring of the growing Buy-Now-Pay-Later market overall, which are specific to the "pay-in-four" model. Our comment covers substantial background of the BNPL market; considerations based on current consumer protection laws, and concerns we hope the Bureau, within its authority, will address.
Comment Letter
Payday and Other Small Dollar Loans

Monday, March 7, 2022

APR Matters: Allows True Comparison; Reveals Astronomical Cost of Payday Loans

Payday lenders often describe the cost of their loans in terms of fees or simple interest rates. Responsible lenders readily disclose the APR on their loans, aligned with the Truth in Lending Act (TILA). They are not afraid to let their customers compare the costs of their loans to other loans in the market. Tellingly, payday lenders often object to having to disclose the APR of their loans. Why APR Matters Payday lenders do not like disclosing APR for two reasons. One, it allows a true comparison of the cost with other forms of credit, even those that are short-term like a credit card advance...
Policy & Legislation
Payday and Other Small Dollar Loans

Wednesday, February 16, 2022

Poll: Rhode Island Voters Overwhelmingly Support 36% Rate Cap

New polling data shows that Rhode Island voters across all political parties are broadly supportive of consumer protections to lower the maximum annual interest rate for payday loans in the state.
Research
Payday and Other Small Dollar Loans

Tuesday, February 8, 2022

Earned Wage Access: States Should Regulate As Credit, Protect Consumers

Earned or Early Wage Access (EWA) products offer workers access to their wages before payday, usually for a fee. While low-wage workers can benefit from EWA programs that are properly designed and regulated, they can instead be harmed when products are allowed into the marketplace without guardrails keeping their use and cost within reasonable bounds. States should regulate all EWA products as credit and require compliance with consumer protections that prevent predatory lending debt traps commonly associated with payday loans.
Research
Payday and Other Small Dollar Loans

Friday, February 4, 2022

FDIC Must Stop Banks from Fronting for Predatory Lenders

With a new chairman taking the helm of the Federal Deposit Insurance Corporation (FDIC), the Center for Responsible Lending joined with more than a dozen other organizations in calling for the FDIC to "stop permitting its supervised institutions to front for predatory lenders evading state interest rate limits."
Letters to Congress
Payday and Other Small Dollar Loans

Thursday, January 6, 2022

Comment to CFPB from Broad Coalition Urges Robust Data Reporting Requirements for Small Businesses

The Center for Responsible Lending (CRL), the National Association of Latino Community Asset Builders (NALCAB), and the National Coalition for Asian Pacific American Community Development (National CAPCACD), along with eleven undersigned public interest groups submitted comments to the Consumer Financial Protection Bureau in regards to its proposed rule to implement Section 1071 of the Dodd-Frank Wall Street Reform and Protection Act. The proposed rule will expand the data collection and reporting requirements in the Small Business Lending Market to include women-owned, minority-owned and...
Comment Letter
Small Business Payday and Other Small Dollar Loans

Tuesday, December 21, 2021

Organizations write to CFPB on Underregulated Fintech Consumer Credit Products

Letter to the CFPB from 79 consumer, housing, civil rights, legal services, faith, community, small business, and financial organizations groups regarding supervision and enforcement of fintech products and fee models that threaten to evade credit, consumer protection, and fair lending laws.
Letters to Congress
Overdraft Fees Student Loans Payday and Other Small Dollar Loans

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Building on Over 40 Years of Lending Experience

CRL’s expertise gives it trusted insight to evaluate the impact  of financial products and policies on the wealth and economic stability of Asian, Black, Latino, rural, women, military, low-wage, low-wealth, and early-career workers and communities.

CRL is an affiliate of Self-Help, one of the nation’s largest nonprofit community development financial institutions. Our work leverages the strength of partnerships with national and local consumer and civil rights organizations.

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