The And Online Payday Loans

1223 Words Dec 28th, 2016 5 Pages
Storefront and online payday loans decreased 23 percent in 2016, according to information released by the Center for Financial Services Innovation, also known as CFSI. Some of the decline is due to payday loan borrowers shifting to bad credit installment loans or other subprime credit products. However, the CFSI study also revealed some alarming statistics that indicate that financially underserved Americans are incurring substantial fees for products other than a payday loan or cash advance loan.

What Is Behind the Drop in Payday Loans?
The Consumer Financial Protection Bureau, an independent federal agency created in 2011 as a result of the financial crisis of 2008, has accused the payday loan industry of "unfair or abusive" practices almost since the day the agency opened its doors. In 2015, the CFPB announced that it would propose new regulations for short-term loans, including bad credit payday loans, auto title loans and certain personal installment loans. Many payday lenders began shifting their focus from payday loan products to installment loans. Installment loans have traditionally been more attractive to borrowers; with longer repayment terms and lower monthly payments, installment loans were a more budget-friendly option for many borrowers. By the time that the CFPB released its formal proposal in June 2016, many borrowers who would have chosen a payday loan in previous years found that they could now choose an installment loan.

However, the shift to…
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