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CFPB finalizes its polarizing payday lending rule

Joe Mont | October 5, 2017

Facing down Republican opposition and industry petitions and protests, the Consumer Financial Protection Bureau has finalized a long-gestating rule “aimed at stopping payday debt traps by requiring lenders to determine upfront whether people can afford to repay their loans.”

“These strong, common-sense protections cover loans that require consumers to repay all or most of the debt at once, including payday loans, auto title loans, deposit advance products, and longer-term loans with balloon payments,” a Bureau statement says. “The rule also curtails lenders’ repeated attempts to debit payments from a borrower’s bank account, a practice that racks up fees and can lead to account closure.”

Payday loans are typically for small-dollar amounts and due in full by the borrower’s next paycheck, usually two or four weeks. They can be expensive, with annual percentage rates...

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