neon sign that reads payday loans

Project

Small-Dollar Loans

Since 2011, Pew’s small-dollar loans project has conducted extensive research on payday, auto title, and similar loans, finding that the market is plagued by unaffordable payments, deceptive business practices, and excessive prices.

The Consumer Financial Protection Bureau—the federal agency charged with regulating these loans—finalized a rule in 2017 that will significantly curtail the harms of short-term loans. However, detrimental longer-term loans from nonbank lenders may flourish if states do not enact sensible safeguards. Federal agencies such as the Office of the Comptroller of the Currency, the Federal Reserve Board of Governors, the Federal Deposit Insurance Corp., and the National Credit Union Administration have demonstrated increasing interest in small credit products, which could lead to lower-cost loans from banks and credit unions becoming widely available, saving millions of borrowers billions of dollars.

Pew provides research, recommendations, and technical assistance to help state and federal lawmakers craft policies for a fair, safe, and affordable small-dollar loan marketplace.

Issue Brief
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Issue Brief

Standards Needed for Safe Small Installment Loans From Banks, Credit Unions

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Issue Brief

Standards Needed for Safe Small Installment Loans From Banks, Credit Unions

Several recent developments have raised the possibility of banks and credit unions offering small installment loans and lines of credit—which would provide a far better option for Americans, who currently spend more than $30 billion annually to borrow small amounts of money from payday, auto title, pawn, rent-to-own, and other small-dollar lenders outside the banking system. Consumers use these high-cost loans to pay bills; cope with income volatility; and avoid outcomes such as eviction or foreclosure, having utilities disconnected, seeing their cars repossessed, or going without necessities. Many of these loans end up harming consumers because of their unaffordable payments and extremely high prices; in the payday and auto title loan markets, for example, most borrowers pay more in fees than they originally received in credit.

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Article

Payday Lending in America

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Article
From Payday to Small Installment Loans
From Payday to Small Installment Loans
Issue Brief

From Payday to Small Installment Loans

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Issue Brief

All of the largest payday lenders now offer installment loans, which are repayable over time and secured by access to the borrower’s checking account, in addition to conventional payday loans that are due in a single lump sum. This shift toward installment lending has been geographically widespread, with payday or auto title lenders issuing such loans or lines of credit in 26 of the 39 states where they operate.

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Report

State Laws Put Installment Loan Borrowers at Risk

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Report

Approximately 14,000 individually licensed stores in 44 states offer installment loans, and the largest lender has a wider geographic presence than any bank and has at least one branch within 25 miles of 87 percent of the U.S. population.

Small Dollar Loans
Small Dollar Loans
Article

State Payday Loan Reform

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Pew’s research has found that when states do not implement standards around pricing and affordability, payday and auto title loans cost three to four times more than is necessary to have widespread access to this credit.

Our Work

How Ohio Solved Payday Loan Reform
7min 1sec
edits
Payday Loans — And How to Fix Them
3min 8sec