New Era for Payday Lending: Regulation, Innovation while the Road Ahead

New Era for Payday Lending: Regulation, Innovation while the Road Ahead

The CFPB proposed rules divide covered loans into two groups: temporary and long run loans. Short term installment loans consist of items that are generally due in the borrower’s next payday as well as single-payment automobile title loans. For these loans, loan providers have the choice of performing a test that is full-payment structuring the mortgage in a manner that prevents the debtor from becoming caught with debt. The payment that is full requires the financial institution to validate the borrower’s earnings (after fees), borrowing history (credit file check), and certain other key responsibilities the debtor might have (including fundamental cost of living such as for instance meals, lease and medical expenses). […]