Payday and Installment Loans

HOT TOPICS Fact Sheet: What States Can Do to Help Consumers: High Cost Loans, July 2019 Letter from Civil Rights and Consumer Groups to Federal Banking Regulators FDIC, OCC, Federal Reserve Bank and the CFPB) Urging them to Prevent the Return of Bank Payday Loans, June 7, 2019; Related Press Release Fact Sheet: State Annual Percentage Rate (APR) Caps for $500, $2,000, and $10,000 Installment Loans, March 2019 Fact Sheet: Stop the Debt Trap: Preserve the Consumer Financial Protection Bureau’s Payday Loan Rule, March 2019 Issue Brief: After Payday Loans: How do Consumers Fare When States Restrict High-Cost Loans? Oct. 2018 Map and chart of state installment loan and credit line interest rate caps Why 36%? The History, Use, and Purpose of the 36% Interest Rate Cap Report

Installment Loans || Payday Loans 

Marketed as a way to help consumers pay the bills until their paychecks arrive, payday loans trap consumers in terrible cycles of debt, dragging their families more deeply into financial crisis. In return for a loan the consumer provides the lender a post-dated check for the amount borrowed plus a fee. The check is held for one to four weeks (usually until the customer’s payday) at which time the customer redeems the check by paying the face amount or allowing the check to be cashed. Payday lenders encourage their customers to get on a debt treadmill by refinancing one payday loan with another. The fees for payday loans are exorbitant with effective interest rates that can top 1,000 percent.

The repeal of usury laws has allowed payday loans and other predatory lending to flourish.

Policy Analysis

Installment Loans

Policy Briefs, Reports & Press Releases

• Fact sheet: What State Can Do to Help Consumers: High-Cost Loans, July 2019
• Fact sheets on APR rates in Southern States, May 2019
• Fact Sheet: State Annual Percentage Rate (APR) Caps for $500, $2,000, and $10,000 Installment Loans, March 2019
• Report: A Larger and Longer Debt Trap?: Analysis of States’ APR Caps for a $10,000 Five-Year Installment Loan, October 2018  Press Release
• Press Release: Court to CFPB: Payday Lending Rule Compliance Date Stays Intact, June 12, 2018
• Press Release: Consumer Watchdog Mulvaney Colludes with Payday Lenders to Delay Payday Rule, June 1, 2018
• Press Release: With New OCC Guidance, Banks Must Ensure Small-Dollar Loans are Affordable, May 23, 2018
• Op-Ed: Rent-a-bank schemes trample voters’ and states’ rights by Lauren Saunders, Feb. 8, 2018
• Press Release: Consumer Financial Protection Bureau Drops Lawsuit Over 950% APR Loans, Jan. 18, 2018
• Press Release: Congress Moves to Protect Predatory Payday Lenders’ Unaffordable 300% Loans and Block Consumer Bureau’s Ability-to-Pay Rule, Dec. 1, 2017
• Press Release: Consumer Watchdog Curbs 300% Unaffordable Payday Loans, Oct. 10, 2017
• Report: Predatory Installment Lending in 2017: States Battle to Restrain High-Cost Loans, Aug. 2017
• Misaligned Incentives: Why High-Rate Installment Lenders Want Borrowers Who Will Default, July 2016
• Report: Installment Loans: Will States Protect Borrowers from a New Wave of Predatory Lending?, July 2015
• Op-Ed: Colorado Is No Model for a National Payday Rule, Dec. 2014
• Guidelines for Affordable Small Dollar Loans, January 2014
• Report: Why 36%? The History, Use, and Purpose of the 36% Interest Rate Cap, April 2013
• Issue Brief: Why Cap Small Loans at 36%?, April 2013

Comments

• Group comments to the CFPB opposing Changes in Rules on Payday, Title and Certain Installment Loans and rescission of Ability-to-Repay Rule, May 15, 2019, Press Release; Shorter comments of 429 organizations in 46 states
• Coalition and longer comments to FDIC on small dollar loans, Jan. 22, 2019
• Comments to CFPB in response to request for information about installment loan practices, Nov. 7, 2016

Payday Loans

Policy Briefs, Reports & Press Releases

• Fact sheet: What State Can Do to Help Consumers: High-Cost Loans, July 2019
• Press Release: Court Decision Signals End of Faux Tribal Payday Lending, April 24, 2019
• Fact Sheet: Stop the Debt Trap: Preserve the Consumer Financial Protection Bureau’s Payday Loan Rule, March 2019
• Policy Brief: NCLC & CRL analysis of Indiana SB 613, March 2019.
• Press release: Consumer Financial Protection Bureau Guts Rule to Rein in HIgh-Cost Short-Term Loans, Feb. 6, 2019
• Press release: Civil Rights and Consumer Groups Implore the FDIC to Say No to Bank Payday Loans and Rent-a-Bank Payday Lending, January 23, 2019
• Issue Brief: After Payday Loans: How do Consumers Fare When States Restrict High-Cost Loans? Oct. 2018
• Issue Brief: OCC’s Short-Term, Small Dollar Lending Bulletin: Vague Guidelines Leave the Devil to the Details, July 2018
• Press Release: CFPB Payday Rule Survives Legislative Threat, Remains Intact for Now, May 17, 2018
• Press Release: Consumer Advocates Urge U.S. House Members to Halt Bank Payday Loan Legislation in Committee Markup, March 21, 2018
• Press Release: U.S. House Votes to Weaken State Limits on High-Cost Loans, Feb. 14, 2018
• Press Release: Consumer Financial Protection Bureau Drops Lawsuit Over 950% APR Loans, Jan. 18, 2018
• Press Release: Congress Moves to Protect Predatory Payday Lenders’ Unaffordable 300% Loans and Block Consumer Bureau’s Ability-to-Pay Rule, Dec. 1, 2017
• Press Release: Consumer Watchdog Curbs 300% Unaffordable Payday Loans, Oct. 10, 2017
• National consumer and civil rights groups urge CFPB to strengthen payday and car title lending rule, Oct. 7, 2016
• Press Release: CFPB Sues Four Online Payday Lenders for Illegal Loans in States, April 28, 2017
• National consumer and civil rights groups urge CFPB to strengthen payday and car title lending rule, Press release, Oct. 7, 2016
• Joint consumer group statement on CFPB’s proposed payday rule, June 20, 2016
• CFPB Proposes Strong Rules to Protect Payday Borrowers Yet Worrisome Loopholes Need Tightening, Press release, June 2, 2016
• First Possible Tech IPO of Year: Elevate Pushes Predatory Long-Term Payday Loans, Press release, Jan. 20, 2016
• Report & Press Release: Payday Lender Prepaid Cards: Overdraft and Junk Fees Hit Cash-Strapped Families Coming and Going, July 15, 2015
• More policy briefs, reports & press releases >>>

Letters

• Letter from Civil Rights and Consumer Groups to Federal Banking Regulators FDIC, OCC, Federal Reserve Bank and the CFPB) Urging them to Prevent the Return of Bank Payday Loans, June 7, 2019; Related Press Release
• Coalition letter to federal banking regulators urging to prevent high-cost deposit advance loans, May 14, 2018
• Open letter to banks: Don’t Make Debt Trap Payday Loans, October 6, 2017
• Letter to Senator Sharon Nelson re: WA HB 1922, SB 5889, high-cost consumer installment loans, Feb. 24, 2015
• Coalition letter to CFPB re: proposed payday lending rules to better protect consumers, Oct. 23, 2014
• Letter to House of Representatives supporting Operation Choke Point and other work against payment fraud, July 15, 2014
• Letter to Senate urging support for Operation Choke Point and other efforts against payment fraud, June 18, 2014
• Letter to CFPB urging a strong rule on payday loans, March 28, 2014
• Letter to DOJ applauding work against payment fraud (including illegal payday payments), Jan. 14, 2014
• More letters >>>

Comments

• Group comments to the CFPB opposing Changes in Rules on Payday, Title and Certain Installment Loans and rescission of Ability-to-Repay Rule, May 15, 2019, Press Release; Shorter comments of 429 organizations in 46 states
• Coalition comments to the CFPB Opposing its Proposal to Delay Compliance Date for Rule Governing Payday, Vehicle, Title, and Certain High-Cost Installment Loans, March 18, 2019 || Longer coalition comments
• Group comments to the FDIC re: Request for Information re: Small-Dollar Lending, Jan. 22, 2019 Short comments signed by 88 groups.
• Coalition comments to National Credit Union Administration (NCUA) re: Payday Alternative Loans, Proposed Rule, 12 CFR Part 701, RIN 3133-AE84, Aug. 3, 2018
• Comments to OCC opposing new fintech lending charter that would preemption state interest rates and other laws, Nov. 14, 2016
• Comments to CFPB in response to request for information about installment loan practices, Nov. 7, 2016
• Coalition comments to the Consumer Financial Protection Bureau re: Proposed Rule on Payday, Vehicle Title, and Certain High-Cost Installment Loans, Oct. 7, 2016
• Consumer comments in support of draft California regulations to strengthen payday loan regulations, June 24, 2015
• Comments to Department of Defense on limitations on terms of consumer credit extended to service members and departments, Dec. 23, 2014
• Comments to California on the role of electronic payments, remotely created checks and prepaid cards in making payday loans, May 19, 2014
• More comments >>>

Payday Policy Analysis Archive >>>

Litigation

• Amicus brief: Community Financial Services Assoc. of America and Consumer Services Alliance of Texas v. CFPB and J. Mulvaney
  NCLC joined AFR, CRL and PC seeking to oppose the joint motion of the CFPB and the payday industry representatives to stay both the litigation and the implementation date of the rule.