“I know they charge high fees, but where else are we going to borrow money?”
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Payday loans have been disastrous for many low income households. The default rate is about 20 percent and many borrowers are forced to renew with additional fees. Borrowers could end up with a debt that includes more fees and interest than the original amount of the loan. Now the Consumer Financial Protection Bureau proposes restrictions to require that lenders establish the borrower’s capacity to repay the loan.