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Responsible Lending

What is Responsible Lending?

The personal loan sector in the US is complex and regulated differently and greatly in different states. Hence, it is important to work with lenders who are respected and legitimate and who follow all the local, state, and federal laws. It is also important to ensure that such loan providers follow the best practices in the sector and engage in responsible lending rules.

Provided below is all relevant and necessary responsible lending information that borrowers need to know with regards to the main acts and laws that protect and safeguard the consumers from unfair lending practices.

  1. The fair lending act

The fair lending act was passed to make sure that all people have similar access to all forms or credit irrespective of their race, age, gender, creed, and other non-monetary elements. It makes sure that no consumer experiences discrimination and that all are equitably able to access personal loans and other credit forms as long as they qualify the financial and authorized rules related to getting such credit. People who feel that they have been discriminated against can visit their local CFPB/Consumer Financial Protection Bureau’s ‘equal opportunity and fair lending office’.

  1. The fair debt collection practices act

All lenders of any kind of credit have the right to use all available legal options to collect debt which has not been repaid by the borrower. However, lenders have to adhere to the rules laid down in the fair debt collection practices act whilst collecting money owed to them. Listed below are certain actions that are deemed as illegal or violations as per the act:

  • Any attempt to speak to a debtor after 8 PM or before 9 AM, as per the local time of the consumer.
  • The use of any harsh, detrimental, harassing, intimidating, or foul language or approaches for collection of the debt.
  • The use of trickery, falsification of information, or misrepresentation of a firm for collection of the debt
  • Threatening to take lawful actions or inflict criminal charges when such official actions are not necessitated
  1. The truth in lending act

This act ensures that all consumers have in writing all data of credit offers available to them before they sign an agreement towards such offers. All information with regards to fees, rates, terms, and interest related with the loans has to be disclosed by lenders before they offer any kind of credit to customers. Each state in America had enacted its own guidelines and riles with regards to online credit lending. It is mandatory for all lenders to make sure that all their credit and loan offers meet such regulations.

  1. Regulations of each state

The state regulations with regards to online lending have been laid down for protection of consumers. These guidelines include interest, fees, maximum amount that can be offered as personal loans, and the maximum number of permitted rollovers, etc. You may visit state government websites to get in-depth explanation of varied regulations with regards to online personal loans.

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