Pew Offers Feedback on Proposed Federal Rule for Payday, Auto Title, and Other High-Cost Loans

The Pew Charitable Trusts filed a letter with the Consumer Financial Protection Bureau on Oct. 7, 2016, to provide comments on its proposed small-dollar loan rule. Pew supports the bureau’s efforts to reform the market for payday and similar loans by giving borrowers more time to repay. However, the letter also notes that the proposal would leave consumers at risk because it would allow lenders to make harmful and unnecessarily costly loans and fails to provide clear, firm guidelines that would enable lower-cost providers, such as banks and credit unions, to enter the market. Pew urged the bureau to amend its proposal by capping loan payments at 5 percent of a borrower’s paycheck, which would reduce prices and improve affordability.