Feds Clamp Down on Payday Loan Rates

The Consumer Financial Protection Bureau rolled out a new proposal Thursday that would limit payday loan interest rates. The loans, which have carried interest rates as high as 390 percent, would face new regulation. Agency Director Richard Cordray called the proposal “common sense,” adding that “too many borrowers seeking a short-term cash fix are saddled with loans they cannot afford and sink into long-term debt.” He continued, “It’s much like getting into a taxi just to ride across town and finding yourself stuck in a ruinously expensive cross-country journey.” The proposal includes a “full-payment” assessment for anyone borrowing up to $500 over the short-term. Lenders would be required to evaluate whether a potential borrower can even afford loan payments and still meet basic living expenses, Reuters reports.