How Do Small-Dollar, Nonbank Loans Work?

88 Pages Posted: 1 May 2019

See all articles by Thomas Miller

Thomas Miller

Mississippi State University - Department of Finance and Economics; Consumers' Research

Date Written: April 24, 2019


Millions of Americans rely on small-dollar, non-bank-supplied credit products: payday, pawn, vehicle title, and personal installment loans from finance companies. Many features of these vital products, however, are not well understood. This book contains explanations of how these loans work, what features they share, and how they differ. Readers seeking to understand these products might learn something surprising. For example, pawn transactions are not loans in the traditional sense; interest rate caps influence the size of installment loans; and the length of a payday loan affects its annualized interest rate. This objective guide is a must-read resource for legislators, regulators, journalists, and anyone else who cares about access to, and regulation of, small-dollar credit.

Keywords: payday loans, nonbank loans, title loans, financial regulation, public policy

JEL Classification: G20, G23, G28

Suggested Citation

Miller, Thomas, How Do Small-Dollar, Nonbank Loans Work? (April 24, 2019). Mercatus Research Paper , Available at SSRN: or

Thomas Miller (Contact Author)

Mississippi State University - Department of Finance and Economics ( email )

Mississippi State, MS 39762
United States

Consumers' Research ( email )

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