CFPB Releases Report on Payday Lending

more+
less-
more+
less-
Explore:  CFPB Payday Loans

The CFPB’s Office of Research released a report, CFPB Data Point: Payday Lending, analyzing consumer use of payday loans. The Office of Research obtained data from storefront payday lenders through the supervisory process. This was the same data used by the CFPB in its report issued on its initial findings on payday loans and deposit advance products (see April 30, 2013 Alert). The report explains the CFPB’s findings with respect to loan sequence durations, loan sizes and amortization and loan usage. According to the report, over 80% of the payday loans surveyed were rolled over or renewed within 14 days. The report also found that 15% of new payday loans were followed by a loan sequence at least 10 loans long and that 50% of all loans are in a sequence at least 10 loans long. The report notes that less than 20% of borrowers surveyed had reductions in principal amounts of their loans between the first and last loan of a sequence. Moreover, monthly borrowers were found to be more likely to stay in debt for 11 months or longer. Finally, most borrowing involved multiple renewals of the initial payday loan, as opposed to having “multiple distinct borrowing episodes.”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this informational piece (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

Topics:  CFPB, Payday Loans

Published In: Consumer Protection Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Goodwin Procter LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »