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...

Groups oppose Senate Bill 613 on lending

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Doug LeDuc | Greater Fort Wayne Business Weekly
Several organizations, including the Indiana Institute for Working Families, met at the Indiana Statehouse 3rd floor atrium March 11 to explain their opposition to a subprime lending bill co-authored by Huntington’s state senator. State Sen. Andy Zay, R-Huntington, co-authored Senate Bill 613, which the Center for Responsible Lending said would allow lenders to exceed for everyone but active military personnel the annual rate cap including fees and charges of 36 percent established in the Military Lending Act.

Advocacy Groups Say Lending Bill Would Create Cycle Of Debt For Hoosiers

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BARBARA BROSHER | Indiana Public Media
A large coalition of consumer advocacy, non-profit and religious groups is calling on state legislators to scrap a controversial short-term lending bill. The legislation passed through the state Senate and now awaits a hearing in a house committee. While some lawmakers say the proposal gives more options to Hoosiers with bad credit, opponents say it will only worsen their financial situations.

Bill Analysis of Indiana SB 613: Consumer Credit

SB 613 increases the rates for existing consumer loans in Indiana, adds additional high-cost loan products to the marketplace, and significantly increases the rates that are considered to be criminal loan sharking. For each of these changes, lenders are provided extraordinary leverage over the borrower, are able to structure the loans in a way that incentivizes repeat re-borrowing, and are not required to ensure that the loans are affordable in light of a borrower’s income and expenses. This combination of incredibly high-cost loans without any sufficient protections against the harms of...

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...

CRL Supports Indiana’s Regulation of Car Title Lending

Indiana prohibits car title loans to its residents with an annual interest rate above 36%. In 2006, the car title lending industry lost a fight in the Indiana legislature to have that interest cap removed. But now the industry's lawyers believe they have found a loophole in the restriction by drawing Indiana residents across the border into car title lender's Illinois offices to complete the loan paperwork. These loans violate Indiana law by charging more than a 300% interest rate. But while the lenders advertise to Indiana residents through Indiana media outlets, have the Indiana Bureau of...