By Paige Marta Skiba and Caroline Malone
Installment loans look like a kinder, gentler form of their “predatory” relative, the pay day loan. However for customers, they may be a lot more harmful.
Utilization of the installment loan, for which a customer borrows a lump sum payment and will pay right straight back the main and curiosity about a variety of regular re payments, has exploded considerably since 2013 as regulators started initially to rein in lending that is payday. In reality, payday loan providers seem to are suffering from installment loans mainly to evade this increased scrutiny.
A better glance at the differences when considering the 2 kinds of loans shows the reason we think the growth in installment loans is worrying – and needs exactly the same regulatory attention as pay day loans.