USA Today reports on plans to sue the Consumer Financial Protection Bureau over its rule on payday lending. As the article epxlians, "The new rule requires providers of payday loans, auto title loans, and other small-dollar advances to predetermine whether borrowers can afford to repay the debts. The rule also limits lender efforts to debit borrowers' checking accounts, a practice that racks up extra fees."
A 2014 study by the [CFPB] found that roughly 62% of all payday loans — often due within two weeks and including annual interest rates of roughly 390% — go to consumers who repeatedly extend repayments. Some end up owing more in fees than the amount they initially borrowed.
"This cycle of piling on new debt to pay back old debt can turn a single unaffordable loan into a long-term debt trap," Richard Cordray, [now former] consumer bureau's director, said in October.
The full article is here.
