All in, there are roughly 20,000 payday shops in the U.S., with total loan volume estimated at around $40 billion a year. But the industry grew as many states relaxed their usury laws – many states, but not all. Payday lending is forbidden in 14 states, including much of the northeast and in Washington, D. And that leaves 27 states where payday lenders can charge in the neighborhood of 400 percent interest – states ranging from California to Texas to Wisconsin to Alabama, which is what drew President Obama there.
OBAMA: Here in Alabama, there are four times as many payday lending stores as there are McDonald’s. Think about that, because there are a lot of McDonald’s.
OBAMA: If you’re making that profit by trapping hard-working Americans into a vicious cycle of debt, you’ve got to find a new business model. You’ve got to find a new way of doing business.
The CFPB doesn’t have the authority to limit interest rates. Congress does. So what the CFPB is asking for is that payday lenders either more https://www.loansolution.com/title-loans-or thoroughly evaluate a borrower’s financial profile or limit the number of rollovers on a loan, and offer easier repayment terms. Payday lenders say even these regulations might just about put them out of business – and they may be right. The CFPB estimates that the new regulations could reduce the total volume of short-term loans, including payday loans but other types as well, by roughly 60 percent. (mehr …)