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From Payday to Small Installment Loans. Dangers, opportunities, and policy proposals for…

From Payday to Small Installment Loans. Dangers, opportunities, and policy proposals for…

Dangers, opportunities, and policy proposals for effective markets

All the biggest payday loan providers now provide installment loans, that are repayable in the long run and guaranteed by use of the borrower’s bank account, along with main-stream payday advances being due in one swelling amount. 1 This change toward installment lending was geographically widespread, with payday or automobile name loan providers issuing such loans or personal lines of credit in 26 regarding the 39 states where they run. 2

Analysis because of The Pew Charitable Trusts as well as others indicates that the standard pay day loan model is unaffordable for many borrowers, contributes to duplicate borrowing, and encourages indebtedness that is far longer than marketed. 3 to deal with these issues, the customer Financial Protection Bureau (CFPB) in June 2016 proposed a rule for regulating the payday and car name loan market by needing many tiny loans to be repayable in installments. Continue reading →