Analysis of Alternative Financial Service Providers

Millions of households conduct financial transactions without ever using mainstream financial services. Many of these consumers often rely on alternative financial service providers--check-cashing outlets, payday lenders, pawnshops, rent-to-own stores, and auto title lenders. These alternative, nonbank financial service providers often carry high costs, limiting low-income families' ability to accumulate assets and establish a credit history. This report investigates the location of three types of alternative providers--check-cashing outlets, payday lenders, and pawnshops--in eight diverse demographic and regulatory environments. For each site, the study presents a demographic profile of alternative provider neighborhoods as well as areas that contain geographic clusters of alternative providers. It also assesses whether the regulatory environment affects the number and location patterns of financial service providers.