![]() ![]() A borrower’s other, costlier option, if they do not repay their loan, is to rollover their loan. A payment plan allows a borrower to repay only the principal and fees already incurred, splitting the remaining balance over several months. ![]() Sixteen of those states require payday lenders to offer no-cost extended payment plans. “Payday lenders have a powerful incentive to protect their revenue by steering borrowers into costly re-borrowing.”Įvery year, more than 12 million borrowers take out payday loans in the 26 states where payday lending is not prohibited. “Our research suggests that state laws that require payday lenders to offer no-cost extended repayment plans are not working as intended,” said CFPB Director Rohit Chopra. While no-cost extended payment plans are meant to help borrowers exit the cycle of rollovers and fees, the payday business model continues to depend on high rollover rates and fees. Instead of using the payment plans, borrowers continue to pay for costly loan rollovers. A report published today by the Consumer Financial Protection Bureau (CFPB) shows few payday loan borrowers are benefiting from no-cost extended payment plans, which are required to be offered to borrowers in the majority of states that do not prohibit payday lending. ![]()
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