New CFPB rule on payday, title loans is a good first step that should prompt further action to protect Alabama consumers

Arise Citizens’ Policy Project executive director Kimble Forrister issued the following statement Thursday, Oct. 5, 2017, after the Consumer Financial Protection Bureau (CFPB) announced a new federal rule on payday and auto title loans:

“High-cost payday and title loans have sent far too many Alabamians spiraling into a long-term cycle of debt. The CFPB’s new rule is a welcome move to protect struggling families from getting stuck in deep debt. The requirement for lenders to verify borrowers’ ability to repay before lending to them is an important, common-sense step to protect consumers.

“The CFPB rule is good news, but it’s far from a cure-all. The rule will not reduce the extremely high annual interest rates that Alabama allows on short-term loans: up to 456 percent a year for payday loans, and up to 300 percent a year for title loans. The new safeguards also don’t apply to many high-cost installment loans.

“Alabama needs to build on these new federal protections by capping interest rates at a reasonable level and ensuring borrowers have a reasonable amount of time to repay what they owe. These changes would be good for consumers and good for Alabama’s economy.”

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