This letter urges the Bureau to establish a strong rule addressing payday, car title, and similar loans. It focuses on the migration of payday and car title lenders to long-term loans that keep borrowers trapped in prolonged unaffordable debt. This migration is already well underway in the states where long-term, high-rate loans are permitted, and lenders are already aggressively seeking authorization of these loans in states where it is not. A rule that does not prevent unaffordable lending in the long-term space will only fuel the migration and will permit ongoing, and in some cases even greater, harm to the communities we represent.

Long term payday and car title loans carry the same hallmark abuses as balloon loans, with the potential to inflict even greater harm. Lenders target subprime consumers with loans that carry an extraordinarily high cost combined with extraordinary leverage: the lender's access to the borrower's bank account and/or car title. Together, these features mean lenders lack an incentive to ensure consumers' ability to repay the loan while meeting other expenses.