Evidence that the credit characteristics of online installment borrowers at the time of repayment are consistently worse than at the time of borrowing should be a sobering thought for lenders that have not been fully tested in a credit downturn.
The Cleveland Fed's conclusion that U.S. consumers are typically worse off after getting online loans encountered strong pushback from their advocates.
Consumers who have borrowed from online lenders owe more and have lower credit scores than similarly situated consumers who have not used online lenders, according to a study released Thursday by the Cleveland Fed. The provocative findings seem likely to spark intense debate.
Rather than pull up stakes and leave two low-income Mississippi towns at the mercy of payday lenders, Regions Bank donated the branches to a local credit union and kicked in another $500,000 for operating costs.
Capital Corps, led by Steven Sugarman, aims to provide financing to homeowners and small businesses that it believes are overlooked by banks. The firm features several former Banc of California executives.
The company, which recently bought Sabadell United in Miami, is pledging to make billions of dollars in mortgages and small business loans in low- and moderate-income communities.
Deserve is offering unsecured cards to young adults who do not have traditional credit scores. The Silicon Valley startup uses a proprietary algorithm that analyzes bank account activity to evaluate the likelihood that borrowers will repay.
TD Bank has pledged $3 million to provide credit counseling to small-business owners. The hope is that those owners will use commercial loans to replace personal credit cards and home equity as their primary forms of business funding.
