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  • Frank Tian

Payday Loan No-Cost Payment Plan

Payday Loan’s No-cost Payment Plan - Few Used

Even though the volume dropped 65% Y/Y in 2020

CFPB continues to focus on payday loan’s high cost

In the recent payday loan market snapshot

CFPB highlights the low take rate of extended payment plan

Among the 16 states that stipulate the no-cost options

Only 1% - 14% have used them.

Possible Reasons:

  • Restrictive eligibility criteria

  • Payday loan operator’s influence

Many people resort to loan rollover

Which is the important revenue source for payday loans

The Background:

Payday loan has been on the decline in the last 10 years

Annual revenue dropped 50% to $4.5 billion

Restrictions were introduced by regulators at different levels

Product innovation provides more choices to consumers, such as

An online installment loan, eared wage access, payday alternative loan

However, as the cash cushion from pandemic assistance begins to dwindle

Many consumers may fall back on high-cost payday loans.

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