TNCA Applauds Federal Action on Payday Predators

Today, the Consumer Financial Protection Bureau (CFPB) issued a rule with protections that will reduce the harms of short-term payday and car-title lending to Tennessee families. Tennessee Citizen Action welcomes this action and calls on Tennessee lawmakers to pass an interest rate cap of 36% or lower for both short-term and long-term payday loans, a rate that has effectively protected residents of many other states from the payday debt trap.

 

Payday and car-title lending costs Tennessee families $402,887,783 per year in abusive fees. The loans drive borrowers into financial distress by trapping them in long-term debt at triple-digit interest rates. Three quarters of all payday loan fees are from borrowers with more than ten loans in the course of a year.

 

At the heart of the CFPB rule is the common sense principle that lenders check a borrower’s ability to repay before lending money – something supported by more than 70% of Republicans, Independents, and Democrats.

 

“The CFPB rule’s ability-to-repay requirements and limits on back-to-back lending will help protect Tennessee families from losing millions of dollars each year to payday predators,” said Tennessee Citizen Action Executive Director Andy Spears. “While we welcome new federal rules, our state legislature must also step up and level the playing field for consumers with a common-sense interest rate cap of 36% to ease the burden payday lenders put on our communities.”

 

Read the CFPB press release and factsheet summarizing the rule on payday loans and  the full CFPB rule on payday loans.

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For more on our work to rein-in payday predators, follow @TNCitizenAction


 

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