The Center for Responsible Lending1 submits this comment to provide additional context about the consumer installment loan market, in particular to highlight issues unaddressed by the proposed settlement with One Main and Springleaf. In this letter, the undersigned organizations bring to your attention three areas of concern that the settlement did not address, but which have a significant impact on borrowers:

  • The high incidence of repeat refinancing in the industry
  • The sale of ancillary products such as credit insurance that significantly increase the cost of installment loans while providing very little benefit to borrowers
  • The tendency of lenders to charge the maximum interest rate permitted under state law regardless of the creditworthiness of the borrower

We were also particularly concerned about the Department's characterization of installment loans as a "lifeline" for consumers. Loans that are not appropriately underwritten such that a borrower can repay them without refinancing are not a lifeline. Neither are loans laden with credit insurance products that significantly increase the cost of the loan while providing little to no benefit to the borrower a lifeline. Rather, installment loans like those that OneMain and Springleaf make often sink borrowers into inescapable debt.