Predatory consumer lending is still flourishing in California. Payday lending continues to be pervasive, capturing borrowers who were sold a short‐term loan in a long‐term cycle of debt. But high‐cost debt trap lending has expanded rapidly in the past few years to much larger loans, including some which are secured by and put a borrower’s car at risk. At the same time, some new lenders are demonstrating that larger consumer loans can be made with lower interest rates and with lower likelihood of defaults and charge‐offs, but additional consumer protections are still warranted.

It is critical for policymakers, regulators and stakeholders to understand these market dynamics as they consider reforming California consumer lending laws that both protect consumers from predatory lending products while preserving and expanding access to safe and responsible lending.

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