the CFPB finalized its long-awaited guideline on payday, automobile title, and particular high-cost installment loans, commonly referred to as the “payday financing rule.” The last guideline places ability-to-repay demands on loan providers making covered short-term loans and covered longer-term balloon-payment loans. For several covered loans, as well as certain longer-term installment loans, the ultimate guideline additionally limits efforts by loan providers to withdraw funds from borrowers’ checking, cost savings, and prepaid reports employing a “leveraged repayment mechanism.”
As a whole, the ability-to-repay provisions of this guideline address loans that need payment of all of the or nearly all of a financial obligation at the same time, such as payday advances, car name loans, deposit improvements, and balloon-payment that is longer-term.