The Consumer Financial Protection Bureau (CFPB) has issued the first part of a final national rule that addresses payday and car title lending. For years, civil rights organizations, consumer advocates, faith groups, working families, and others across the country have pushed for a rule to protect their communities from the payday lending debt trap. This rule represents another step forward in protecting the millions of people lenders intentionally trap in 300-plus percent interest loans. We expect payday and car title lenders to aggressively attempt to block the rule, which is based on the commonsense principle of determining whether borrowers can afford to repay a loan before making it.
Fifteen states plus the District of Columbia have already implemented strong state laws against the payday debt trap by enforcing a rate cap of 36% interest or less. States should continue to enact and enforce such rate caps, as the CFPB does not have legal authority to do so.