Marketplace and ProPublica worked together in recent months on an investigative series about what consumer advocates call 'small-dollar, high-cost' loans -- in this case, installment loans offered by a billion-dollar publicly traded company, World Acceptance Corp. of Greenville, S.C. The company's 1,000-plus loan stores are branded as World Finance across the South and Midwest.
Installment loans can carry high interest and fees, like payday loans. But instead of coming due all at once in a few weeks -- whenever your next paycheck hits your bank account, installment loans get paid down over time -- several months to a few years. Like payday loans, they are often renewed before they're paid off.
Defenders of installment loans say they can help borrowers build a good payment and credit history. Renewing can be a way for the borrower to access additional cash when they need it.
So, we have a few questions we'd like our listeners and followers to weigh in on:
- Are short-term cash loans with high interest and fees really so bad, if people need them to get through an emergency or to get caught up between paychecks?
- Is it better for a low-income borrower with poor credit to get a high-cost installment loan—paid back slowly over time—or a payday- or car-title loan due all at once?
- Is a loan with APR above 36 percent 'predatory'? (Note: the Military Lending Act sets an interest-rate cap of 36 percent for short-term loans to service members, and Sen. Dick Durbin has introduced a bill to impose a 36-percent rate-cap on all civilian credit products.)
- Should government, or banks and credit unions, do more to make low- to moderate-interest loans available to low-income and credit-challenged consumers?
- In the post-recession environment, banks can borrow cheaply from the Fed, and most middle-class consumers can borrow cheaply from banks — for mortgages or credit card purchases. Why can't more disadvantaged consumers access this cheap credit?
Join us here May 16, at 11 a.m. PT
Join us for a live discussion this Thursday, May 16, at 11 a.m. PT, with Marketplace's Mitchell Hartman and ProPublica's Paul Kiel.
We encourage you to leave questions in advance in the comments below. You can also tweet in questions with the hashtag #BeyondPayDay.
Read other stories from the Marketplace and Propublica joint investigation "Beyond payday loans: Installment lending and the cycle of debt." Explore the whole series here.