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Consumer use of payday, auto title, and pawn loans: Insights from the Making Ends Meet Survey

In this research brief, we examine the prevalence, persistence of use, and alternate credit sources available for consumers who use payday, auto title, and pawn loans. We use the first two waves of the Bureau’s Making Ends Meet survey, conducted in June 2019 and June 2020, to examine how consumers use these services over time. The survey is associated with traditional credit bureau data, allowing us to examine other credit characteristics such as whether these consumers appear to have readily available credit on credit cards. The Making Ends Meet survey thus gives us a rare opportunity to combine a survey of the same consumers over two years with credit record data to understand consumers’ decisions about debt.

We find that consumers who use a payday, auto title, or pawn loan in one year are often still using that type of loan a year later. Some users of these services have lower cost credit available on credit cards, while others lack access to traditional credit. Among payday, auto title and pawn loan borrowers who experience significant financial shocks, the costs of these shocks often exceed other possible sources of funds.

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