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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.

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36% Cap on Annual Interest Rate Stops Payday Lending Debt Cycle

Tuesday, November 28, 2023

36% Cap on Annual Interest Rate Stops Payday Lending Debt Cycle

Payday loans, high-cost small loans averaging $350 that usually must be repaid in a single payment after two weeks, are designed to create a long-term debt trap for consumers. A 36% annual percentage rate (APR) cap on payday loans (including fees) is the best way to stop the cycle of debt. To date, 20 states and the District of Columbia...
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Research
Payday and Other Small Dollar Loans

Groups Urge DFPI to Prevent Consumer Harm in the Market for Income-Based Advances

Monday, November 27, 2023

Groups Urge DFPI to Prevent Consumer Harm in the Market for Income-Based Advances

The California Department of Financial Protection and Innovation (DFPI) should restore cost limits for earned wage advances and other fintech cash advances under proposed regulations rather than allow a temporary registration regime with no cost limits for up to four years, the Center for Responsible Lending, Consumer Federation of California, National Consumer Law Center, and Office of Kat Taylor said...
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Comment Letter
Payday and Other Small Dollar Loans

Issue Brief: Consumer Understanding of Buy Now, Pay Later in California

Wednesday, October 25, 2023

Issue Brief: Consumer Understanding of Buy Now, Pay Later in California

Buy Now, Pay Later (BNPL) or pay-in-four products allow consumers to purchase goods in four equal, often interest-free installments over a set time period (often 6 weeks). BNPL is often available directly at checkout on an e-commerce website (like Amazon or Apple) or through a third-party smartphone or web application. Examples of third-party BNPL providers include Affirm, AfterPay, Klarna, Splitit...
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Research
Payday and Other Small Dollar Loans

Survey Summary of Earned Wage Advance and Cash Advance Apps

Tuesday, August 22, 2023

Survey Summary of Earned Wage Advance and Cash Advance Apps

Consumers are increasingly accessing small short-term loans through digital cash advance and Earned Wage Advance (EWA) online applications. Consumers can receive advance amounts up to $750 per pay period while using these apps. Some companies contract with employers to provide this product while others work directly with consumers. In the direct-to-consumer model, the advances are often marketed as “free,” but...
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Research
Payday and Other Small Dollar Loans

Debt Trap Drives the Fee Drain: Payday and Car-Title Lenders Drain Nearly $3 Billion in Fees Every Year

Thursday, June 15, 2023

Debt Trap Drives the Fee Drain: Payday and Car-Title Lenders Drain Nearly $3 Billion in Fees Every Year

Millions of Americans continue to experience financial precarity, and this report illustrates how payday and car-title lending extract financial resources from communities across the United States.
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Research
Payday and Other Small Dollar Loans

Red Alert Rates: Annual Percentage Rates on $400, Single-Payment Payday Loans in the United States

Monday, June 12, 2023

Red Alert Rates: Annual Percentage Rates on $400, Single-Payment Payday Loans in the United States

Payday lenders charge exorbitant fees to borrowers without assessing their ability to repay, and the annual interest rates on these loans are in the triple digits.
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Research
Payday and Other Small Dollar Loans

CRL and NCLC Comment in Support of the DFPI’s proposal to Clarify that Fintech Cash Advances are Covered by the California Financing Law

Wednesday, May 17, 2023

CRL and NCLC Comment in Support of the DFPI’s proposal to Clarify that Fintech Cash Advances are Covered by the California Financing Law

The Center for Responsible Lending (CRL) and the National Consumer Law Center (NCLC) expressed support for the Department of Financial Protection and Innovation’s (DFPI) proposal to clarify that fintech cash advances are covered by the California Financing Law (CFL), including its fee and interest rate limits. The proposal requires that lenders be licensed under the CFL, with a temporary licensing...
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Comment Letter
Payday and Other Small Dollar Loans

Consumer, Civil rights, and Labor Groups in California Commend Efforts to Regulate Abusive Fintech Lenders

Wednesday, May 17, 2023

Consumer, Civil rights, and Labor Groups in California Commend Efforts to Regulate Abusive Fintech Lenders

The undersigned organizations commend the Department of Financial Protection and Innovation (DFPI) for moving to regulate abusive fintech lenders, including earned wage advance providers. We are very pleased to support the proposed rules and encourage the DFPI to vigorously enforce them to ensure that California’s most vulnerable consumers are not harmed. Signatories California Employment Lawyers Association (CELA) CA Labor Federation...
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Comment Letter
Payday and Other Small Dollar Loans

Burned Borrowers: A Look at the Experiences of OppFi Customers

Friday, April 7, 2023

Burned Borrowers: A Look at the Experiences of OppFi Customers

Opportunity Financial, also known as OppFi, is a consumer lending company based in Chicago, Illinois that offers personal installment loans. Their marketing suggests they are providing an essential service to the credit and income constrained; their products, however, carry triple-digit Annual Percentage Rates (APRs). Public filings reveal a business model built around high levels of delinquency and default. According to...
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Policy & Legislation
Payday and Other Small Dollar Loans

Adding Fuel to the Fire: OppFi Hurts, Does Not Help, Borrowers’ Credit Health

Friday, April 7, 2023

Adding Fuel to the Fire: OppFi Hurts, Does Not Help, Borrowers’ Credit Health

Opportunity Financial, also known as OppFi, is a consumer lending company based in Chicago, Illinois that offers personal installment loans. Although OppFi’s stated mission is to “empower everyday consumers to rebuild their financial health,” OppFi is a legacy subprime lender. The company uses a rent-a-bank scheme to evade consumer protections and charge customers triple-digit interest rates on its personal installment...
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Policy & Legislation
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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