When Payday Loans Die, Something Else Is Going to Replace Them

For years, the word most closely associated with payday loans has been predatory. These loans have been derided not just for how expensive they are, or how they tend to push borrowers into a series of recurring loans, but also because of who they target: poor and minority consumers who have few other banking options. New regulations released by the Consumer Financial Protection Bureau this month will seriously curb the supply of the most dangerous and well-known versions of payday loans: small in amount, high in fees, with repayment periods of only a few weeks.

But the regulations will do little to address the other side of the problem: consumers’ demand for small, fast, easy-to-obtain loans. Solving that problem, while ensuring that new predatory loans options don’t pop up, will fall to the financial industry and state legislators—who’ve struggled in the past to protect financially vulnerable Americans.

The new CFPB payday rules focus on payday and auto-title loans that require repayment in less 45 days or less. Among the stipulations, the regulations require