By now you’ve likely heard that the Consumer Financial Protection Bureau (CFPB) has released a final small-dollar lending rule concerning Payday, Vehicle Title, and Certain High-Cost Installment Loans (the “Final Rule”). The hallmark of the Final Rule is the requirement that lenders make a reasonable determination that a borrower has the ability to repay a loan while also meeting basic living expenses, prior to issuing a consumer loan with a repayment term of 45 days or less and longer term consumer loans with a balloon payment. The rule however, is much more complex than that simple proposition. Like the mortgage origination and servicing rules previously issued by the CFPB, the Final Rule also establishes new consumer disclosures, prohibits certain payment withdrawal methods related to collection, sets forth record retention standards, and creates a national reporting system. In no uncertain terms, the Final Rule will dramatically change the paradigm for most small dollar lenders.
For a detailed analysis of the Final Rule, readers can download a PDF copy of Bradley’s whitepaper “A Deeper Dive: The CFPB Small-Dollar Short-Term Lending Rule.”