By Paige Marta Skiba and Caroline Malone
Installment loans appear to be a kinder, gentler form of their “predatory” cousin, the payday loan. But also for customers, they might be much more harmful.
Utilization of the installment loan, where a customer borrows a lump sum payment and will pay straight back the key and desire for a group of regular repayments, is continuing to grow considerably since 2013 as regulators started to rein in payday financing. Actually, payday loan providers seem to are suffering from installment loans mainly to evade this increased scrutiny.
A better glance at the differences when considering both kinds of loans shows why we think the development in installment loans is stressing – and requires the exact same attention that is regulatory payday advances.
At first, it looks like installment loans might be less harmful than pay day loans. (more…)