Before, availing payday loans in the United States of America seemed to be very simple to do. Because of this, even those who were not that capable of paying back the loans were given the chance to have these loans, causing them to be put in a serious financial crisis. This is actually the main reason why the new sets of rules pertaining to payday loans have been initiated by the Consumer Financial Protection Bureau. This is for the benefit of the borrowers as well as the loan providers out there. Chicagotribune.com has published the new sets of rules regarding these loans.
The truth is, the new sets of rules are not only affecting payday loans, but also some other types of loans that people can avail these days. Even so, the main target of these new rules is the payday loan since there are a lot of serious problems about this one committed by those borrowers out there. Those high cost short-term loans are also being affected by the rules, especially those that have the same policy with the payday loans in terms of paying back.
Furthermore, installment loans work differently with the payday loans. Even so, this does not exempt them from the new sets of rules initiated by the Consumer Financial Protection Bureau in the United States. These loans are being paid back through scheduled payments. Apart from that, the auto-title loans are also subjects for the rules.
You might be wondering why payday loans are very easy to be availed in the past years. Well, the main explanation for that is that payday loans before did not require the borrowers to prove that they were capable enough in paying back the loan in the scheduled time. This is very disadvantageous to the loan providers since this can be a great loss for them. Even so, do not think that this is also not very disadvantageous to the borrowers since it is.
As a borrower, you might be given with bad credit rating, which can affect you when you will try to avail some other loans the next time. Before, the payday loan providers will only require a proof of salary to the borrowers, and you are good to go. It is not that strict compared these days, in which the CFPB already requires the loan providers to conduct some investigations about how capable the borrowers are in paying back the loans.