Who Needs Credit at Tax Time and Why: A Look at Refund Anticipation Loans and Refund Anticipation Checks (Occasional Paper)Brett Theodos,
Rachel Brash,
Jessica F. Compton,
Nancy M. Pindus,
C. Eugene SteuerleRefund Anticipation Loans (RALs) and Checks (RACs) are controversial financial products used by one in seven tax filers. This report presents findings on many of the most important individual and geographical characteristics influencing RAL/RAC use, as well as, insights about product use from tax preparers, RAL/RAC lenders, RAL/RAC tax form software developers, low-cost RAL lenders, and Volunteer Income Tax Assistance (VITA) program sites. The results suggest that factors such as lack of interest income, geographic location, EITC receipt, filing as a head-of-household, income, and living in a poor neighborhood, each independently contributes strongly to RAL/RAC use.
| Posted: February 24, 2011 | Availability: HTML | PDF |
State Restrictions on Small-Dollar Loans and Financial Services, 2004-2009: Summary, Documentation, and Data (Research Report)Nancy M. Pindus,
Daniel Kuehn,
Rachel BrashThis report documents state restrictions of five small-dollar products: auto title loans, pawnshop loans, payday loans, refund anticipation loans, and rent-to-own agreements between 2005 and 2009, in all states and the District of Columbia. Researchers find that over half of states prohibit auto title loans while a much smaller number of states prohibit payday loans. Nearly all states cap prices on at least one of the five products and the majority of states cap interest rates for pawnshops and payday lenders. Fewer than half of states impose disclosure requirements or price caps on rent-to-own agreements.
| Posted: February 24, 2011 | Availability: HTML | PDF |
Prohibitions, Price Caps, and Disclosures: A Look at State Policies and Alternative Financial Product Use (Occasional Paper)Signe-Mary McKernan,
Caroline Ratcliffe,
Daniel KuehnUsing new nationally representative data from the National Financial Capability State-by-State Survey, this paper examines the relationship between state-level alternative financial service (AFS) policies (prohibitions, price caps, disclosures) and consumer use of five AFS products: payday loans, auto title loans, pawn broker loans, RALs, and RTO transactions. The results suggest that more stringent price caps and prohibitions are associated with lower product use and do not support the hypothesis that prohibitions and price caps on one AFS product lead consumers to use other AFS products.
| Posted: February 24, 2011 | Availability: HTML | PDF |
Summary on Developing a Research Agenda on Small-Dollar Credit and Financial Empowerment (Research Report)Signe-Mary McKernan,
Jessica F. ComptonThe U.S. Department of the Treasury gathered 50 foundation representatives and researchers from academia, government, the nonprofit sector, and industry to participate in the convening Developing a Research Agenda on Small-Dollar Credit and Financial Empowerment.This summary provides key insights from the one-day event including discussions on both the demand for and supply of small-dollar credit and what participants identified as research needed to inform policymaking in order to address the challenges related to meeting the small-dollar credit needs of underserved populations, notably low- and moderate-income individuals.
| Posted: February 24, 2011 | Availability: HTML | PDF |
Research on Financial Behaviors and Use of Small-Dollar Loans and Financial Services (Research Report)Brett Theodos,
Jessica F. ComptonMillions of American households, especially those in the bottom half of the income distribution, use nonbank credit products. This credit, while small in initial denomination, can add up to significant debt burdens for those who can least afford it. Yet, the extensive use of alternative financial sector services indicates that consumers perceive such services to be useful or necessary. This summary provides an overview of research on this sector. It reviews literature on five small-dollar credit products and financial services: auto title loans, pawnshops, payday lending, refund anticipation loans and checks, and rent-to-own borrowing.
| Posted: July 19, 2010 | Availability: HTML | PDF |
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