Affordability Limits on Small-Dollar Lending Likely to Devastate Consumers According to Navigant Economics

A new study found that arbitrarily setting limits on small-dollar consumer loans will cripple access to credit for those who need it most, according to Dr. Anand Goel of Navigant Economics.

Small-dollar credit is a form of unsecured consumer credit primarily characterized by the low dollar amounts of loans. There has been increasing debate about the benefit and harm to consumers from small-dollar loans, along with recent discussion of greater regulation. Determining the need for and appropriate form of regulation requires an understanding of the current state of the small-dollar credit industry based on actual industry data. One significant change is the shift from single-payment payday loans to multiple-payment loans or installment loans. This paper is the first systematic study of small-dollar installment loans.

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