In a recent piece in the Military Times, American Financial Services Association (AFSA) President Bill Himpler warns of the unintended consequences of new federal legislation that would impose a Military Lending Act-style APR cap on consumer loans.
He points out that policy proposals like rate caps have the unintended consequence of placing greater pressure on consumers to borrow more than they need, resulting in higher finance charges, longer repayment periods, and higher overall costs, despite having a lower interest rate.
Furthermore, he says, the proposed rate cap will mean that many responsible lenders may no longer be able to offer small-dollar loans, pushing consumers to the predatory lenders that advocates claim must be avoided. Either way, whether they are service members or everyday working Americans, consumers are harmed.
The article can be read here:
NILA fully supports and endorses the opinions put forth in Mr. Himpler’s article.