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Consumer Financial Protection Bureau wants to end “Debt Traps”

Auto Equity Loans

The short-term lending industry is setting up American consumers to fail is the conclusion the CFPR has reached.  Federal regulators are issuing proposed new rules that could alter the practices of title loans and payday lenders.

The CFPB found to many borrowers seeking a short-term cash fix are falling in at trap without an escape.

One of the new rules that is designed to stop lenders from making repeated attempts to debit a borrower’s account after two straight unsuccessful attempts.  This is expected to stop the piling on of fees charged by a borrowers bank for each denied draft on their checking account.

The period for public comment on the proposed new rules starts shortly and ends September 14, 2016.  The Consumer Bankers Association warns that if the proposed rules are implemented borrowers will be forced to turn to even more costly borrowing.

Hard to image rates more than 700%.

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Posted June 2, 2016