The trend among payday and automobile name loan providers toward providing installment loans has been driven by three facets: customer choice, regulatory force, and lendersвЂ™ work to prevent customer defenses set up for lump-sum payment loans.
PewвЂ™s studies have shown that, compared to the standard lump-sum model, pay day loan clients overwhelmingly help requiring an installment re re payment framework that offers them additional time to settle loans in small amounts that squeeze into their budgets. One loan provider explained, вЂњI discovered in Colorado which our consumers just like the affordability,вЂќ and noted the industryвЂ™s likely change for the reason that way. 10 the pinnacle associated with main trade relationship for online loan providers said her members have mostly changed their products from two-week lump-sum loans to installment loans in reaction to consumer demand. 11 (See Figure 1.)