Americans Overwhelmingly Support Payday Loan Regulations
New research from Pew Charitable Trusts shows that Americans overwhelmingly support the proposed payday loan regulations from the Consumer Financial Protection Bureau. Only 1 in 10 Americans surveyed in May saw payday lenders in a positive light, and 75% said payday loans should be more regulated.
The CFPB plan submitted in March outlines ways for consumers to be protected from “debt traps” common in the world of payday lending. The proposal restricts lenders from collecting funds from customers in ways that typically result in excessive fees.
“The proposals we are considering would require lenders to take steps to make sure consumers can pay back their loans,” said CFPB Director Richard Cordray. “These common sense protections are aimed at ensuring that consumers have access to credit that helps, not harms them.”
The Pew survey reveals 78% of consumers support the idea of requiring a lender to check a borrower’s ability to repay a loan before issuing funds. 75% say consumers should be allowed to make payments over the course of several months, not two weeks.
The survey also showed that roughly 12 million Americans use payday loans every year with the average payday loan being for $375. Since it is usually not paid back in time and must be made repeatedly, the average payday loan incurs $520 in fees.
78% of respondents would like banks and credit unions to be able to offer small-dollar loans at rates lower than payday lenders.
With the amount of support the CFPB has for payday loan regulations, there could be significant changes to come in this industry.