Introduction -

By now you’ve likely heard that the Consumer Financial Protection Bureau (CFPB) has released a final small-dollar lending rule. The hallmark of the 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 under 45 days. The rule however, is much more complex than that simple proposition. We are issuing this white paper so that industry participants can better understand the challenges and opportunities provided for by the rule. Following the format of the rule, we’ll address (1) which lenders and loans are covered; (2) exempt transactions and lenders; (3) underwriting and disclosure requirements; (4) payment withdrawal limitations; and (5) information furnishing and recordkeeping requirements.

Covered Loans -

In a change from the CFPB’s 2016 proposed rule, the final rule largely bifurcates the regulation of loans with repayment periods of less than 45 days and loans with repayment terms of greater than 45 days...