Under new guidelines released by the Consumer Financial Protection Bureau, lenders will be required in many cases to verify their customers’ income and to confirm that they can afford to repay the money they borrow, the New York Times reported today. The number of times that people could roll over their loans into newer and pricier ones would be curtailed. The new guidelines do not need congressional or other approval to take effect, which could happen as soon as next year. The Obama administration has said such curbs are needed to protect consumers from taking on more debt than they can handle. The consumer agency — which many Republicans, including Donald J. Trump, have said they would like to eliminate — indicated last year that it intended to crack down on the payday lending market. “The very economics of the payday lending business model depend on a substantial percentage of borrowers being unable to repay the loan and borrowing again and again at high interest rates,” said Richard Cordray, the consumer agency’s director. Lenders say that the proposed rules would devastate their industry and cut vulnerable borrowers off from a financial lifeline. Read more.
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