WASHINGTON–There is strong support for additional regulation around payday lending among both customers and consumers in general, according to new research released by the Pew Charitable Trusts’ consumer finance project.
The findings include a preference among consumers for CUs and banks to be able to offer lower-cost options to payday loans.
Two national surveys, one featuring the opinions of consumers generally, and the other payday loan borrowers’ views, are being released as payday loan reforms are under consideration at the Consumer Financial Protection Bureau and in a number of state legislatures, Pew notes.
Among the highlights from the nationally representative survey of American adults include:
- 70% of respondents want more regulation of payday loans.
- Seven in 10 adults want banks to offer small loans to consumers with low credit scores.
- When evaluating a loan regulation’s effectiveness, Americans focus on pricing rather than origination processes.
- Respondents say typical prices for payday installment loans that would probably be issued under the CFPB’s proposed rule are unfair.
- 80% dislike the CFPB proposal’s likely outcome of 400% APR payday installment loans with more time to repay, but 86% say enabling banks and credit unions to offer lower-cost loans would be a success.
The nationally representative survey of payday loan borrowers found that:
- 70% of borrowers believe payday loans should be more regulated.
- Support for requiring installment payment structures is strong.
- Borrowers’ priorities for reform include lower prices, affordable payments, and being able to obtain small loans from banks and credit unions.
- Eight in 10 would prefer to borrow from a bank or credit union if they were equally likely to be approved, and 90% would do so if the loans cost six times less than those of payday lenders.