payday lending

Sharks don’t like shark cages; Online lending industry resists regulation

...Brent Adams, a lobbyist for the Woodstock Institute in Chicago that does research on fair lending practices, said that he’s not surprised by opposition to the bill.

“We have observed that some of these alternative lenders offer loans on terms that we would consider predatory,” Adams said. “Whenever you take a financial system and seek to implement major reforms, you’re going to get some objections."

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A Check-in on Our Legislative Priorities

This is an image of the Illinois State Capitol.

The bill on which we have spent the most time this session is SB 2804, and we have worked closely with our ally, the Illinois Asset Building Group.  The bill, which is sponsored by Senator Daniel Biss, would amend the Illinois Wage Assignment Act.  A wage assignment is a debt collection method used by non-traditional lenders -- like payday lenders -- to access a borrower’s wages when the borrower defaults on a loan.  Federal regulations provide that wage assignments are unlawful unless they are revocable by the borrower.  By contrast, under the Illinois

Report: Increasing Number of Illinoisans are Trapped by Predatory Auto Title Loans

“Because title loans are largely unregulated in Illinois, lenders have increased loan terms to an average of over 18 months while still charging interest rates over 200 percent APR,” said Spencer Cowan, Senior Vice President of Research at Woodstock Institute. “Multi-year, triple-digit loans are incredibly expensive and, with the borrower’s car title securing the loan, there is very little incentive for the lender to consider the borrower’s ability to repay the loan with his or her existing income.

A birthday wish for the CFPB: Strong payday loan protections

Payday loans often trap consumers in a cycle of debt due to lump sum payments, high annual percentage rates (APR), and little consideration of whether borrowers can afford to repay their loans. To combat this, the CFPB is developing new rules for payday loans. In an initial outline of the proposed rules, the CFPB proposed to require that lenders verify a borrower’s ability to pay back a loan while still covering basic necessities and existing debts, among other protections.

CFPB Proposal is Major Step Forward towards Ending Payday Loan Cycle of Debt

Woodstock Institute is part of the Monsignor John Egan Campaign for Payday Loan reform and the Stop the Debt Trap Campaign, which are fighting for an end to abusive lending.  In Illinois, short-term payday loans carry a 391 percent annual percentage rate (APR), installment loans carry a 99 percent APR, and car title loans are largely unregulated. Dory Rand, President of Woodstock Institute, made the following statement on the proposal:

 

Comment letter to the Department of Defense supporting regulations that close loopholes in the Military Lending Act

The Military Lending Act (MLA) sets a 36 percent rate cap on consumer credit for service members and authorizes the Department of Defense to define “consumer credit.” The existing definition is narrow and allows high-cost lenders to continue to target service members. This letter supports new proposed rules that expand the definition of “consumer credit” to include all forms of credit subject to the Truth in Lending Act and not excluded by the MLA. The letter also urges the Department to include overdraft programs and rent-to-own transactions in its definition of consumer credit.

Webinar: make your voice heard to the CFPB through complaints, comments

Written by Dan Fair on May 28, 2014 - 12:11pm

Join Woodstock Institute and CFPB staff for a webinar to explain how to let the CFPB know what you’re seeing on the ground. Your input will help get relief for the people you serve and help the CFPB make sure that their policymaking and enforcement work reflects local realities.

Register for the webinar.

Ensuring that service members have protections for all types of high-cost credit products

Many  service members are young, face expensive situations where they must pick up and move at the drop of a hat, and may be stationed far from family and friends who could help them in times of need. High-cost lenders know that these factors make quick cash alluring to service members and frequently set up shop near military bases. The cycle of debt can be especially devastating for service members, who could lose their security clearance and even their jobs due to blemished credit histories.

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