While North Dakota does not allow car title loans the state does allow payday loans to steal over $6 million from people who can least afford it through fees and interest. Payday loans in North Dakota often charge over 400 percent interest.
The rule was scheduled to go into effect summer 2019, 21 months after being published in the federal register - a more than ample implementation period. Release in October of last year, the payday lending rule will result in few families falling into financial ruin by being captured in this debt trap.
At the heart of the rule is the common-sense ability-to-repay principle based on a borrower's income and expenses, which means that lenders will be required to determine whether a loan is affordable to the borrower before making it. An affordable loan is one a borrower can reasonably repay without re-borrowing or going without the basic necessities of life like food or rent money.
The rule release was years in the making, and it wouldn't have been possible without the tireless effort of community and faith leaders, consumer and civil rights advocates, and countless people across the country who organized and spoke out against the devastating payday loan debt trap.
The Stop the Debt Trap campaign, made up of more than 700 organizations from across the country, including the North Dakota Economic Security and Prosperity Alliance, released the following statement:
"This move shows the level of influence that payday lenders have over Mick Mulveney, who for years received campaign contributions while a member of Congress. With Tuesday's announcement, Mulveney is sending an unmistakable signal that he wants to kill this common-sense regulation.
The payday rule was issued after years of research and extensive stakeholder input; the evidence is overwhelming that these 300 percent annual interest loans trap borrowers in an unaffordable cycle of debt, causing severe financial harm such as bank penalty fees, delinquency on other bills, or even bankruptcy. There is no reason to reopen the rule, and doing so shows disdain for consumer protections and communities of low-income that are targeted by these debt trap loans."