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What’s the difference between payday and installment loans?
Payday loans and installment loans (in particular, the kind given by World Finance) are exactly what customer advocates call ‘small-dollar, high-cost loans that are. They frequently carry high interest. This is certainly in component since the borrowers are generally low-income, and/or have dismal credit or little credit rating. Such subprime borrowers may not have use of cheaper types of consumer credit—such as charge cards or home-equity loans through banking institutions or credit unions.
Payday financing has already been the mark of critique by customer advocates while the Consumer Financial Protection that is new Bureau. Installment financing has flown mainly beneath the radar of general public attention and increased scrutiny that is regulatory. But, as market and ProPublica present in our joint research, some installment loans might have deleterious results on consumers much like those of payday advances, dragging those customers into an ever-deeper cycle of financial obligation.