The Consumer Financial Protection Bureau, commonly called the CFPB, is a federal agency created under the authority of the Dodd-Frank Act. The CFPB's jurisdiction includes credit unions, debt collectors, banks, securities firms, and even payday lenders. Since its inception, the CFPB has been particularly critical of lenders that offer credit products to subprime borrowers, and the agency's pending regulations could eliminate installment loans for borrowers with bad credit. Why CFPB Regulations Could Eliminate Installment Loans for Bad Credit Borrowers An installment loan is simply a loan that is repaid over a period of months or years, and each monthly payment is the same amount. Installment loans may be secured by tangible assets that the lender can claim in the event of the borrower's default; Mortgages and vehicle loans are examples of secured installment loans. However, CFPB regulations primarily target unsecured installment loans for relatively small amounts. With an unsecured loan, the lender has little more than the borrower's word that payments will be made on time and that the loan will be repaid in full. These are the types of bad credit installment loans that may soon no longer be available. Although the CFPB regulations for payday loans have received most of the media attention, the proposed rules will have a significant impact on installment loans. Highlights of the new regulations include: • Requiring lenders to determine whether the borrower has the ability to repay the loan and continue to cover living expenses and other financial obligations • Preventing lenders from refinancing a loan that would have similar payments unless that the borrower cannot demonstrate that the new loan wo...... half of the paper ...... predict that a variety of other industries could profit if consumers with damaged credit can no longer access loans of small dollars. Consumers could face more reconnection fees from utility companies, more NSF fees from their banks, or late payment penalties from landlords or mortgage companies. The exact consequences of the CFPB regulations have yet to be seen. In all likelihood, it will take two or three years before accurate studies can be conducted to measure the real impact of the regulations. However, all predictions are that the new rules will reduce access to credit for those who already have few options. Where to learn more The proposed CFPB regulations are long and complex. If you would like to find out more about the impact of the new rules or about installment loans for bad credit, visit the Personal Money Store.