The average payday loan carries an annual percentage rate (APR) of 391 percent. Are you or someone you know affected by these often debilitating fees?
The Consumer Financial Protection Bureau (CFPB) has proposed new rules that would reign in many of the most egregious abuses of payday lenders and car title loan businesses. This long awaited effort follows on the efforts of many states to bring order to the nearly unregulated small lender marketplace.
The goal isn’t to completely prohibit small payday loans or car title loans, but rather to make the terms of the loans more fair and transparent to consumers. Did the CFPB hit its mark, go too far, or not go far enough? The answer might depend on which side of the desk one sits—as a lender or a consumer.
The proposed rules seek to accomplish several important changes in the short term and longer term payday and car title loan marketplace. These include limits on the number of loans, and a determination of the ability to repay, along with protections for consumers on collection practices.
For local autonomous Goodwill organizations and the people who seek out Goodwill for job training services these new rules could bring a new level of financial protection. Too many people, trapped by the debt these loans can generate, simply leave the workforce, and all the effort they have made to rebuild a life with the help of Goodwill goes down the drain.
If you’re looking to get a better idea of how people are borrowing money in the U.S. or how you can work towards being debt-free, check out this infographic from GoodProspects.
Goodwill Industries International is reviewing the rules and will be preparing a response to the CFPB’s proposed rules. You can find the proposed rules on the CFPB website. Once we have finished the review of the rules and developed comments we will be urging you to support them on our Legislative Action Center.