entity

National Consumer Law Center

Also known as: NCLC

Facts (14)

Sources

Predatory Installment Lending in the States: How Well Do ... - NCLC nclc.org National Consumer Law Center 14 facts

claimThe National Consumer Law Center recommends that states prohibit coercive repayment mechanisms, such as security interests in household goods and post-dated checks.

referenceThe National Consumer Law Center published a report titled 'Misaligned Incentives: Why High-Rate Installment Lenders Want Borrowers Who Will Default' in July 2016.

claimThe National Consumer Law Center recommends that states include anti-evasion provisions in lending laws to prevent lenders from laundering loans through out-of-state banks to bypass state rate caps or disguising loans as sales or 'earned wage' payments.

claimThe National Consumer Law Center recommends that states implement strong enforcement mechanisms, such as making unlicensed or unlawful loans void and uncollectible and providing a private right of action with attorneys' fees.

referenceThe National Consumer Law Center published a report titled 'Larger Loans Need Lower Rates: A 50-State Survey of the APRs Allowed for a $10,000 Loan' in March 2024.

claimThe National Consumer Law Center asserts that in the absence of federal rate limits, state interest and fee caps serve as the primary protection against predatory lending.

measurementThe National Consumer Law Center suggests that states limit balloon payments, interest-only payments, and excessively long loan terms, proposing an outer limit of 24 months for loans of $1,000 or less and 12 months for loans of $500 or less.

procedureThe National Consumer Law Center recommends that states protect consumers from high-cost lending by implementing the following measures: (1) Cap APRs at no more than 36% for smaller loans (e.g., $1,000 or less) with lower rates for larger loans; (2) Prohibit or strictly limit loan fees to prevent them from undermining interest rate caps or incentivizing loan flipping; (3) Include all payments in the APR calculation, regardless of whether they are deemed 'voluntary,' to prevent lenders from disguising fees as tips, expedite fees, or donations; (4) Prevent loopholes for open-end credit by ensuring rate caps apply to lines of credit; (5) Ban the sale of credit insurance and other add-on products; (6) Examine consumer lending bills carefully to identify obscured interest rates, such as those presented as daily or monthly rates rather than annual rates, and reject bills with APRs over 36%.

referenceThe National Consumer Law Center published a report titled 'Installment Loans: Will States Protect Borrowers from a New Wave of Predatory Lending?' in July 2015.

accountThe report 'Predatory Installment Lending in the States: How Well Do the States Protect Consumers Against High-Cost Installment Loans?' was co-authored by Carolyn Carter, Andrew Pizor, and Lauren Saunders of the National Consumer Law Center.

procedureThe National Consumer Law Center recommends that states employ robust licensing and reporting requirements for lenders, including the reporting of default and late payment rates.

procedureThe National Consumer Law Center recommends that states require lenders to evaluate a borrower's ability to repay any credit extended.

claimThe National Consumer Law Center used the TILA APR rather than the MAPR in their rate calculations because of the difficulty in identifying the cost of credit insurance and other add-ons allowed by state laws.

procedureThe National Consumer Law Center recommends that states require proportionate rebates of all up-front loan charges when loans are refinanced or paid off early.