payday lending | KERA News

payday lending

From Texas Standard:

New rules from the U.S. Consumer Financial Protection Bureau regulating payday lenders were supposed to take effect on Aug. 19. The rules – laid out in 2017 – would have regulated lenders' ability to withdraw funds directly from a person's bank account. Those rules are on hold for now as the agency and a payday lender trade group challenge it in court.

In Texas, nearly 70 cities have their own rules regulating payday and other high-interest loans. But there's one notable holdout: Fort Worth is Texas' largest city with no laws on the books that regulate payday and auto title lenders.

The Consumer Financial Protection Bureau is targeting one of the hallmarks of the Obama administration: a rule that would protect the most vulnerable borrowers from the ballooning debt that can accrue with payday loans.

The rule never actually took effect. And now the consumer protection bureau is proposing to take it off the table.

The agency's chief, Kathy Kraninger, said in a statement that pulling back the rule would encourage competition in the payday lending industry and help improve credit options for borrowers in need.

Even in a strong economy, many Americans live paycheck to paycheck. Forty percent don't have $400 to cover an emergency expense, such as a car repair. And many working-class people turn to payday loans or other costly ways to borrow money. But more companies are stepping in to help their workers with a much cheaper way to get some emergency cash.

Startup companies that offer better options for workers are partnering with all kinds of businesses — from giants like Walmart to little fried chicken restaurants.

Many payday lenders could go out of business if rules made final this week by the Consumer Financial Protection Bureau go into effect. But the changes face stiff headwinds from Republicans in Congress.

One new rule would require payday and auto title lenders to determine whether a borrower can afford to repay in full within 30 days. That could thwart a business model that consumer advocates say relies on the rollover of unpaid loans with the accumulation of exorbitant fees and interest rates of 300 percent or more.

From Texas Standard:

Texas leads the nation in payday lending and car title loan businesses with more than 3,000 storefronts across the state. Payday lenders are both a blessing and a curse: on one hand, they meet a need; on the other, they do so through sky-high interest rates.

That's why communities of faith are getting involved in the effort to better regulate them. But should faith leaders get involved in money matters?

 


Federal Rules Could Tame 'Wild West' Of Texas Payday Lending

Jun 20, 2016
Tamir Kalifa / The Texas Tribune

Leonard Abbott of San Marcos had heard of the dangers of payday loans — the small-dollar, high-interest credit that can quickly trap borrowers in a morass of debt. But when unexpected medical bills blew a hole in his monthly budget last year, he felt he had nowhere else to turn. He took out a $500 loan, expecting to pay it back in full in two weeks. When he couldn’t, he sought more loans, until about a third of his $1,700 monthly take-home pay was going toward paying interest and fees alone.

 

From Texas Standard:

The average American family will spend $900 this holiday season. If you are among the lucky 22 percent of Americans who will get a bonus this season – that's probably what you'll use. The majority of us in situations like these that require extra cash look for alternatives.

Perhaps you've seen commercials like this oneA camera zooms in and out shooting some pretty nice trucks and cars. Vehicle owners point to bumper stickers that reflect their personalities. The images in the commercial may vary but the message is the same: if you own your car, borrow money from us. Just let us keep your car title as security.

 


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When faced with a financial emergency, some turn to payday or car title lenders. There’s about 175 of them in Dallas offering quick cash at great cost. The city and an Austin-based lender to small businesses have announced an alternative.