Sign on to letters in support of CFPB proposed rule on payday lending
Letters to Congressional Delegation in support of CFPB’s proposed rule on payday lending
In the coming year, the federal Consumer Financial Protection Bureau (CFPB) is expected to issue a proposed rule to address payday lending. Many of your organizations have worked together to end the payday loan debt trap by advocating for state legislative proposals to limit the interest rate on payday loans to 36% APR—the same limit enacted by Congress to protect military families.
We plan to send the attached letter to our Senators and to our 6 congressional representatives in support of this proposed rule, and to ask our representatives to support it. We are asking your organization to sign on to this letter, so that we can show a strong support in Kentucky for the CFPB’s proposed rule.
As you know, payday lenders in Kentucky can charge 390% APR interest or higher. Although payday loans are marketed as a quick financial fix, they typically result in long-term debt. Borrowers who are unable to repay within 14 days end up taking out a series of loans, each new one paying off the last. Many Kentucky families end up stuck in the payday loan debt trap. The average borrower takes out 10 loans per year, and the number of payday loans continues to increase every year.
Many states have taken legislative action to end the debt trap, but not Kentucky. While the CFPB cannot issue a 36% rate cap like states, it has the opportunity to reshape the payday lending industry by taking the following steps:
- Limiting the number of loans or periods of indebtedness per year
- Requiring that payday lenders determine in advance the borrower’s ability to repay
- Prohibiting payday lenders from accessing borrowers’ bank accounts
Please reply by Thursday, November 6.
If you need more time to consider this, please let us know.
Yes, we want to sign on to the letters in support of the CFPB proposed rule on payday lending.