Consumer Use of State Payday Loan Extended Payment Plans
The report examines state payday loan extended payment plans, an intervention allowing payday borrowers to repay their loan in no-cost installments. It finds that despite the prevalence of state laws providing for these plans, rollover and default rates consistently exceed extended payment plan usage rates. The Bureau has observed that monetary incentives encourage lenders to promote higher-cost rollovers at the expense of extended payment plans.
The report also finds that eligibility requirements for extended payment plans vary across states and likely impact reported usage rates. State laws typically address several key provisions, such as number of installments, plan length, allowable fees, frequency of use, consumer eligibility, and disclosures. Extended payment plan usage rates range from less than one percent in Florida to 13.4 percent in Washington State.