Short-Term, Small-Dollar Lending: Policy Problems and Implications

Affordability is an issue surrounding small-dollar lending. The expense related to small-dollar loans seem to be greater when comparing to longer-term, larger-dollar loans. Also, borrowers may belong to financial obligation traps. A financial obligation trap happens whenever borrowers whom can be not able to repay their loans reborrow (roll over) into brand brand new loans, incurring extra costs, instead of …