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.
Link to the report: Payday loan extended payment plan report
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