The CFPB recently published a report outlining extended state payday loan payment plans and their use. Extended payment plans, often seen as an “exit ramp” for consumers, allow consumers to pay off outstanding payday loan installments at no additional cost. The specific provisions of extended payment plans depend on the law of the state in which the loans are taken out – the report summarizes the various provisions relating to installments, length of plan, permitted fees, frequency of use, consumer eligibility and disclosures in sixteen states. that have passed extended payment plan laws.
The report examines the benefits of extended payment plans for consumers, particularly compared to rollover plans. It also summarizes publicly available and state-reported data on expanded payment plan utilization rates compared to rollover plans. The data is consistent with previous CFPB publications that lenders have little incentive to promote extended payment plans, and in many cases there is a monetary incentive not to.
The CFPB “will continue to monitor lender practices that discourage consumers from taking extended payment plans and will take appropriate action.”