Using Loan Plus Lender Literacy Information to Combat One-Sided Marketing of Debt Consolidation Loans
1Associate Professor of Marketing, Smeal College of Business, Pennsylvania State University.
boltonle@psu.eduPaul N2Adjunct Professor of Social Entrepreneurship and Marketing, Fuqua School of Business, Duke University.
paul.bloom@duke.eduJoel B3Distinguished Service Professor Emeritus, Warrington College of Business, University of Florida.
joel.cohen@warrington.ufl.eduAbstract |
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The marketing of debt consolidation loans is intended to offer a financial remedy to consumers faced with mounting debt and credit problems and unable to meet their monthly payments. The authors argue that debt consolidation loan marketing overemphasizes the short-term benefits (e.g., lower monthly payments) and downplays the considerable downside of these loans (e.g., longer repayment and more total interest paid). Two experiments demonstrate that a financial literacy intervention combining information about loans and lenders can help consumers understand and respond to debt consolidation loan marketing (whereas a basic financial numeracy intervention does not). Implications for consumers, marketers, public policy makers, and researchers who work in the area of financial literacy are discussed.
Keywords loan marketing, financial literacy, money management