When cash is tight, some people turn to payday and similar loans to make ends meet. Though these loans offer quick access to money, they often carry an average annual interest rate of over 300 percent, in addition to other fees. For some people these loans become debt traps.
Last month, we announced a proposed rule that would require lenders to determine whether borrowers can afford to pay back their loans. The proposed rule would also cut off repeated debit attempts that rack up fees and make it harder for consumers to get out of debt. These strong proposed protections would cover payday loans, auto title loans, deposit advance products, and certain high-cost installment loans.
If you or someone you know has had an experience with payday and other similar loans, we’d like to hear from you. We are also seeking comments from financial institutions that may be affected by the rule, consumer advocates, and anyone else who wants to share their views. We carefully consider all the comments we receive, and we hope to hear from all perspectives. The deadline for submitting comments on the proposed rule is now Oct. 7, 2016.
We also announced an inquiry into other potentially high-risk loan products and practices that are not specifically covered by the proposed rule. The deadline for submitting comments on the is now Nov. 7, 2016.