Why small dollar credit is not underwritten and why policy makers can’t force it.

When you compare traditional credit and short-term credit options, you will find very few things in common. Other than both having terms of payment, everything else is very different, including the regulations that control them. One of the most significant contrasts between the two types of credit is what is involved in the credit approval process. One financial CEO even joked of short-term credit approval requirements, “All you need is a pay stub, a bank account and a heartbeat.” This general lack of requirements and underwriting has brought waves of scrutiny in recent years about whether short-term, high cost loans […]

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International Jurisdictions looking at U.S. policy as small-dollar credit expands globally.

Small-dollar, short-term lending continues to expand globally as access to traditional consumer credit tightens. Developed countries are noticing rapid expansions in their small-dollar lending industries, and many are looking for solutions on how to regulate this sector of consumer finance. Consumer advocates are demanding government regulation and are driving associated regulatory bodies to identify best practices for regulating this sector. Many of these regulatory bodies are looking to the United States as one of the oldest and most diversely regulated small-dollar lending marketplaces. The U.S. has 37 states with legal, regulated small-dollar lending. These jurisdictions each have unique regulations and […]

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Veritec Releases Response to Proposed CFPB Rules

FOR IMMEDIATE RELEASE Jacksonville, Fla., October 26, 2016 – Veritec Solutions LLC, the industry leader in real-time regulatory solutions, submitted comments on October 6th in response to the Notice of Proposed Rulemaking on Payday, Vehicle Title, and Certain High-Cost Installment Loans released by the Consumer Financial Protection Bureau (CFPB). For over 15 years, Veritec has managed regulatory database programs spanning 14 states. Our expertise in the industry stems from our extensive experience in the payday, vehicle title, and installment loan sector, as well as the strong relationships developed with regulators, lenders, and consumers. Veritec’s response includes the following topics in […]

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CFPB Publishes Final Rule on Small Dollar Loans

The Bureau of Consumer Financial Protection has issued this final rule to create consumer protections for certain consumer credit products. The rule has two primary parts. First, for short-term and longer-term loans with balloon payments, the Bureau is identifying it as an unfair and abusive practice for a lender to make such loans without reasonably determining that consumers have the ability to repay the loans according to their terms. The rule generally requires that, before making such a loan, a lender must reasonably determine that the consumer has the ability to repay the loan. The Bureau has exempted certain short-term […]

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