Every year, an estimated 15 million people access small-dollar credit (SDC) products- like payday loans, pawn loans, auto title loans, deposit advance loans, and more. CFSI explores the reasons why consumers turn to these potentially high cost products in our latest report, Know Your Borrower: The Four Need Cases of Small-Dollar Credit Consumers.
The study, supported by funding from the Ford Foundation, identifies four primary consumer need cases in the SDC market, each representing a distinct borrower profile and different uses of small-dollar credit. The need cases are:
These need cases were determined through analysis of a panel survey of more than 1,100 SDC borrowers and 31 in-depth interviews with SDC customers. They provide a new framework for exploring the challenge of when and how to responsibly extend small-dollar credit. The findings also suggest potential opportunities for the development of high-quality products, highlighting the importance of product differentiation and underwriting.
Read the report by clicking here.
Click here to download our infographic highlighting the report.