Small dollar lending has become increasingly controversial in recent years, especially now that the number of automobiles repossessed by the car title lending industry doubled over the last three years. Now a new federal rule could mean an end to lending practices critics call predatory.
Debra Grant of Virginia Beach says she took a payday loan because she needed the money. She admits that she wasn’t thinking about the terms of the loan when she signed the dotted line.
“Sometimes when your back is against the wall, you’re going to do what what you have to do."
Grant says she got trapped in a cycle of debt that hurt her and her family. Now she says that payday loan was predatory.
“We have to tell the stories, and there are a whole lot of stories out there that people can tell who get trapped in these loans."
Those stories and many more like it are why the Consumer Financial Protection Bureau held a field hearing in Kansas City today to announce a new rule aimed at car-title lenders and payday lenders. The hearing included some criticism from Bill Himpler of the American Financial Services Association. He says he’d like to see …
“Clear empirical evidence as to the harm before we roll the dice on millions of Americans."
Dana Wiggins at the Virginia Poverty Law Center says the proposed rule doesn’t go far enough because it only requires lenders to prove borrowers can pay back the money for short term loans.
“If you have an ability to repay standard, we think it should actually be similar to the way that other kinds of lenders have to assess someone’s ability to repay."
Meanwhile, a Florida lawmaker has a bill with bipartisan support to delay the rule for two years.