By Paige Marta Skiba, Professor of Law, Vanderbilt University; and Caroline Malone, Ph.D. Scholar in Law and Economics, Vanderbilt University
Installment loans look like a kinder, gentler form of their “predatory” relative, the cash advance. But also for customers, they may be much more harmful.
Utilization of the installment loan, in which a customer borrows a lump sum payment and will pay straight right back the key and curiosity about a number of regular re re payments, has exploded significantly since 2013 as regulators started initially to rein in payday financing. In reality, payday lenders may actually are suffering from installment loans primarily to evade this increased scrutiny.