Payday loan providers have embraced installment loans to evade regulations – nonetheless they can be a whole lot worse
Professor of Law, Vanderbilt University
Ph.D. Scholar in Law and Economics, Vanderbilt University
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Installment loans appear to be a kinder, gentler form of their “predatory” relative, the cash advance. However for customers, they may be much more harmful.
Utilization of the installment loan, by which a customer borrows a lump sum payment and will pay straight back the main and curiosity about a number of regular repayments, is continuing to grow significantly since 2013 as regulators begun to rein in lending that is payday. In reality, payday loan providers seem to have developed installment loans mainly to evade this scrutiny that is increased.
A closer glance at the differences when considering the two kinds of loans shows why we believe the growth in installment loans is worrying – and needs the exact same attention that is regulatory pay day loans.
At first, it looks like installment loans could be less harmful than payday advances.…