High-Cost Lenders Scheme with Banks to Evade Consumer Protections

A few high-cost lenders are evading state consumer protections through rent-a-bank schemes. Through these sham arrangements, these companies are exploding right through the interest rate limits that most states have put in place for good reason, to protect people from high-cost debt traps that drain them of their hard-earned income. In the following states, payday lenders are using banks, which aren’t generally subject to state interest rate caps, to make usurious loans that exceed the state’s rate cap. The banks engaging in these schemes are abusing their charters and enabling predatory loans...

Plan to forgive public-service workers’ student loans off to rocky start

Source
Alyssa Klink | Cronkite News
WASHINGTON – The federal government promised college students in 2007 that if they took their degrees and went into a public service profession, they could apply to have whatever student loan debts they still had after 10 years forgiven. So far, the reality has been somewhat different. When the first 29,000 applications were filed with the Department of Education last year, just 96 were OK’d, an approval rate of 0.33 percent.

He paid $10,000 for an RV. But the dealer never gave him the title

Source
Rebekah L. Sanders | Arizona Republic
When Ken Pepion paid $10,000 for a recreational vehicle to enjoy in retirement, he expected to own it. But five months after driving off the lot of Scottsdale RV, Pepion still has no proof the vehicle is his. "We tried to get in touch with the dealer. Their phones would ring and ring, but no one would answer," Pepion, a retired Colorado college administrator, said. "We had no idea what was going on." Current Arizona law gives dealers 30 days to complete title work and file it with the state. Scottsdale RV shut its doors within Pepion's 30-day period, he said.

States without Payday and Car‐title Lending Save $5 Billion in Fees Annually

Payday and car title loans are small-dollar, high-cost products that thrive on keeping consumers in a cycle of debt. With lenders doing essentially no underwriting, consumers find it easy to obtain these loans, often marketed as a solution to financial emergency. However, the unaffordability of the loan and the lenders extreme leverage over the borrowers – either through direct access to the bank account or threatening repossession of the borrower’s car - makes it very difficult to escape a cycle of debt that can last months, if not years. Debt trap products often lead to other financial harms...

Payday and Car Title Lenders Drain Nearly $8 Billion in Fees Every Year

Payday and car-title loans typically carry annual percentage rates (APR) of at least 300%. These high-cost loans are marketed as quick solutions to a financial emergency. Research demonstrates, however, that they frequently lead to debt that is nearly impossible to escape. In addition, these loans are related to a cascade of other financial consequences, such as increased overdraft fees, delinquency on other bills, involuntary loss of bank accounts, and even bankruptcy. For car-title loans, the end result is too often the repossession of the borrower’s car, a critical asset for many people...

High-Cost Payday Lending Traps Arizona Borrowers

Over 700 payday lenders charging up to 459% annual percentage rate (APR) for a two-week loan are located throughout Arizona; with the highest concentrations per capita in Pinal, Mohave, and Maricopa Counties. A typical Arizona borrower pays an estimated $516 in fees for a $325 payday loan and still owes the $325 in principal. Overall, payday lending costs Arizona families nearly $149 million each year. Payday lending drains $91 million and $23 million from Maricopa and Pima County households, respectively. Payday lenders will no longer be able to charge triple-digit interest rates when their...