Payday lenders will have to make sure their customers can repay their loans and “still meet basic living expenses and major financial obligations” under a slate of federal rules to be proposed Thursday.
The Consumer Financial Protection Bureau is proposing a set of rules that it says will help people avoid falling into what it calls payday debt traps. It will hold a hearing Thursday in Kansas City to discuss industry issues and take comments from the public.
Its proposals would also require payday, auto title, deposit advance and some other lenders to use credit reporting systems, limit repeated unsuccessful efforts to debit customers’ accounts for payment and offer principal payoff options and longer loan choices.
“Too many borrowers seeking a short-term cash fix are saddled with loans they cannot afford and sink into long-term debt,” bureau director Richard Condray said in an announcement of the proposed rules. “By putting in place mainstream, common-sense lending standards, our proposal would prevent lenders from succeeding by setting up borrowers to fail.”
Read more: Kansas City Star