Group comments to NCUA proposed rule on short term loans

COMMENTS of
NATIONAL CONSUMER LAW CENTER (on behalf of its low-income clients)
and
CONSUMERS UNION
on the
National Credit Union Administration’s Proposed Rule on
Short-Term, Small Amount Loans
12 CFR Part 701
75 Fed. Reg. 24497 (2010)

July 6, 2010 

With respect to the proposal, we support a higher 28% interest rate cap for small dollar loans but with the following changes to the proposed rule: 

• Only one $20 application fee should be permitted per year, or at most every six months.
• No other fees, including late or other penalty fees, should be permitted.
• The minimum term should be 90 days, or one month per $100 borrowed for loans under $300.
• Loans at the 28% rate must be repaid in multiple, fully amortizing installment payments.
• Loans at the 28% rate should not be secured by mandatory electronic repayment or other electronic security, nor require payroll deduction. A direct deposit requirement, without mandated electronic repayment, is acceptable.