When your car is a ticket to short-term cash and long-term hardship

Under the payday-loan rule issued in 2017 by the consumer agency — led then by Obama-appointed Richard Cordray — lenders would be required to verify the borrower’s ability to repay without upending their ability to meet their daily expenses and obligations.

Now, under the leadership of new director Kathy Kraninger — appointed to the position by President Donald Trump — the bureau wants to rescind that requirement. Kraninger says there was insufficient evidence to support the need for the provision and that it could reduce people’s access to credit.

Consumer advocates disagree.

“Car-title lenders will keep doing business as usual and keep people in unaffordable loans,” Standaert said.

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The other part of the rule, which is less likely to affect auto-title loans, would remain in place: Providers of short-term loans such as payday loans would face limits on how many times they can try to withdraw payment from a customer’s bank account if the charge doesn’t go through. The effective date for that provision is scheduled for August.

Auto-title loan providers generally get less federal oversight than payday lenders.

While state laws govern auto-title loans, the Dodd-Frank Act of 2010 granted some authority to the bureau (which the legislation also created) to regulate such lenders. Before that, they had largely flown under the radar of federal lawmakers and regulators.

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