Design Matters: Learning from Consumers’ Experiences with Small-Dollar Loans


Reliable access to high-quality small-dollar credit (SDC) is vital to the financial success of millions of U.S consumers. Yet many SDC products, especially those within reach of consumers with limited or low credit scores, carry terms that do not support a successful repayment but instead put borrowers at risk of becoming trapped in mounting cycles of debt.

To understand consumers’ needs, preferences and experiences with small dollar credit, the Center for Financial Services Innovation, with support from the Ford Foundation, conducted both qualitative and quantitative research with SDC consumers. This research is part of CFSI’s vision to advance quality innovation in the consumer credit marketplace and to inform the development of a new generation of SDC products.

CFSI released the quantitative portion of this research in 2012, a panel survey of over 1,100 SDC borrowers. Among the findings, it revealed that beyond quick access to funds and clear terms, borrowers also value certain loan features, including the length and the price of the loan, repayment policies, and related aspects of customer service. Thus, the quantitative data suggests it is the overall loan structure that defines loan quality for many borrowers.

To gain additional insights into consumer preferences with regard to loan features and terms, CFSI conducted in-depth interviews with customers of three small-dollar credit providers. To draw our sample, CFSI reached out to providers of credit products with at least one unique or potentially innovative feature, in order to gauge the impact of alternative features on customers’ satisfaction and outcomes.

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Author Name: 
Nick Bianchi