Payday lending is a hot-button issue. Consumer Focus released a study saying the number of payday loans borrowed within the United Kingdom has quadrupled in the last four years. In states as diverse as Montana, Arizona, and Ohio, new legislation that limits payday lending has been passed. If S. 3245 passes the Senate, the Truth in Lending Act can be extended to cover the interest rate of pay day loans.
Trying to comprehend payday financing statistics
Understanding the payday loan business and its customers is complicated by ubiquitous inaccurate and conflicting data. A recent record by Personal Money Store shows that though there are many things about pay day loans that are simply not supported by research. Most cash advance or short-term credit customers make over $ 47,000 in a year and have been working at one job for four years or more. Over 90 percent of customers who take out payday loans say they comprehend the charges they’re paying. At the exact same time, only about one-fifth of credit card customers comprehend their charges, according to a report by creditcards.com.
The numbers that support payday lending
Studies by groups ranging from the Federal Reserve of New York State to our business, Personal Money Store, found that 11 percent to 20 percent of applications in brick-and-mortar stores and up to 99 percent of online applications are rejected. Over 20 percent of short-term loans, even with these high standards, have to be entirely written off as a total loss. Goldman Sachs reported 27 percent profit to the SEC in April. Most personal loan companies report between 8 and 10 percent profit — far from the “making Money hand over fist” that is the general perception.
Trying to educate the discussion
An informed discussion of the political issues around payday lending can be difficult to discover. With pending legislation in the Senate, 15 states that ban payday financing altogether and several states thinking about limitations, accurate data are vital.
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