Traditional Installment Loans Are a Valuable Tool in American Families’ Financial Tool Chest

Access to High-Quality Small-Dollar Credit is a Key Component of Financial Success for Many Americans
Bill Himpler, Executive Vice President, American Financial Services Association

(Washington, DC, Tuesday, October 4, 2016) - For more than a century, traditional installment lending has proven to be the most affordable and responsible form of consumer credit for working Americans. Before the internet, the local branch of an installment lender was often the only access to credit for many Americans. They are community-based lenders in cities and towns nationwide. Compared to other forms of small dollar credit, including credit cards, installment loans are the best way for consumers to manage credit and build a positive payment history with the credit bureaus.

In the past several years, consumer advocates and groups have pushed to restrict the ability of Americans to get safe, responsible credit. The American Financial Services Association is successfully pushing to ensure that Americans continue to have this important financial tool in their toolbox.

As this battle continues to wage, we need to remember that traditional installment loans are a valuable tool in American families’ financial tool chest. It is important to maintain access to forms of credit that work as policymakers attempt to restrict ones that do not.

Access to high-quality small-dollar credit is a key component of financial success for many Americans. However, millions of Americans do not have access to small-dollar credit or only have access to high-cost, low-quality small-dollar credit products that too often lead them into a cycle of repeat usage and mounting debt.    

  • Traditional installment loans provide a safe, responsible form of credit to consumers who need it.
  • Other forms of small dollar credit do not provide the level of quality that Traditional Installment Loans do.
  • It is critically important that legislation and regulation at the federal, state, and local level ensure access to quality credit is maintained.

Traditional installment loans are a time-tested consumer product. They are designed to avoid a cycle of debt by scheduling regular, manageable payments of principal and interest, giving the borrower a clear roadmap out of debt. They are “plain vanilla” loans with transparent, easy-to-understand terms, due dates and payment amounts. Installment lenders determine each consumer’s ability to repay. At the time of origination, each and every loan is made with the highest confidence and expectation that it will be paid back in full and on time. 

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