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America’s Middle Class Is Addicted to a New Kind of Credit - Bloomberg

The payday-loan business was in decline, but just a few years later, many of the same subprime lenders that specialized in the debt are promoting an almost equally onerous type of credit, according to a Bloomberg News commentary. It’s called the online installment loan, a form of debt with much longer maturities but often the same sort of crippling, triple-digit interest rates. If the payday loan’s target audience is the nation’s poor, then the installment loan is geared to all those working-class Americans who have seen their wages stagnate and unpaid bills pile up in the years since the Great Recession, according to the commentary. In just a span of five years, online installment loans have gone from being a relatively niche offering to a red-hot industry. Subprime borrowers now collectively owe about $50 billion on installment products, according to credit reporting firm TransUnion. In the process, they’re helping transform the way that a large swathe of the country accesses debt. And they have done so without attracting the kind of public and regulatory backlash that hounded the payday loan, according to the commentary. Bloomberg

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