Ability to Repay Rule

The Ability to Repay rule requires lenders to ensure borrowers have enough income, savings, and financial stability to realistically repay a loan before approving it. This rule is meant to prevent risky lending practices that could harm borrowers and the economy. Lenders evaluate factors like income, employment status, debts, and expenses to confirm that the borrower can handle the loan payments comfortably. By doing so, they help promote responsible lending, reduce defaults, and protect consumers from taking on more debt than they can afford.