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Customer preference

Customer preference

Pew’s studies have shown that, compared to the traditional lump-sum model, cash advance clients overwhelmingly help requiring an installment re payment framework that provides them more hours to settle loans in small amounts that squeeze into their spending plans. One loan provider explained, “I discovered in Colorado which our customers just like the affordability,” and noted the industry’s likely shift for the reason that way. 10 the top for the main trade relationship for online loan providers said her members have mostly changed their products or services from two-week lump-sum loans to installment loans in reaction to customer need. 11 (See Figure 1.)

Legislation

In 2013, federal banking regulators issued guidance highly discouraging banks from issuing lump-sum “deposit advance loans,” which mimic the dwelling of traditional pay day loans. 12 The CFPB’s proposed guideline for payday and comparable loans emphasizes the necessity for affordable monthly premiums, and in case finalized, the bureau’s guideline would expedite the transition toward installment loan structures. 13