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11 February, 2019

Payday Lending: CFPB Payday Revision Positive For Lenders

Enova International (ENVA), FirstCash, Inc. (FCFS), and auto title lenders will benefit from the Consumer Financial Protection Bureau's (CFPB) proposed payday lending rule revisions. The agency is proposing to rescind the ability-to-repay (ATR) requirement in its entirety, in line with our expectation. This includes debt-to-income (DTI) and residual income assessments, cooling-off periods, and caps on the number of rollovers. The payday lending rule would have reduced payday loans by an estimated 55-62%, payday industry revenues by 71-76%, and auto title industry revenues by 89-93%. The proposed revisions would prevent these projected declines in lending and associated revenues from occurring. The comment period is open for 90 days and will close in early May, and we expect the revisions to be finalized in late 4Q19 to early 1Q20. In addition, the CFPB proposed extending the August 19, 2019 compliance date to November 19, 2020.