Effect on customers. The rule significantly curtails short term loans, a fact acknowledged by the CFPB in its present form. The CFPB simulations suggest that utilising the power to repay choice (“prevention”), loan amount will probably fall between 69 84%.

Their simulation, with the alternative choice (“protection”), would end up in a 55 62% decline in loan amount. Outline of Proposals into consideration and Alternatives Considered, pp. 40 44 (Mar. 26, 2015). These simulations take into consideration just the more restrictive demands to be eligible for short term loans nor look at the impact that is operational loan providers (that will be discussed below). The CFPB concedes that because of this, the likelihood is that “[r]elatively few loans might be made underneath the capability to repay requirement.” Id., p. 45. Furthermore, [m]aking loans that adhere to the choice requirements…would also provide significant effects on income.” Id. The CFPB concludes, consequently, that the proposition can lead to significant consolidation in the marketplace.

Effect on Lenders. The proposed rule significantly increases the operational costs involved in making covered loans in its present form.
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