Sub-prime lending in the US
This study is motivated by a desire to gain a deeper understanding of US citizens use use of alternative credit instruments, such as payday loans. In particular, it seeks to explain why they use these instruments, how borrowers perceive them, and what alternatives might be viable. Recent trends are especially in need of further study. For example, some evidence suggests that middle-class individuals are increasingly using payday loans, and little is known about the growing popularity of online payday loans. This project seeks to understand the needs, characteristics, and perceptions of borrowers, as well as how they use these products. This research uses a dataset of mostly online, short-term loans provided by Clarity Services, Inc., a credit reporting agency focused on subprime borrowers and credit reporting activity from alternative financial services. It also involves surveys and depth interviews to better understand borrowers’ needs.
MDRC, The New School