CA Payday Overview

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Dolores Huerta On Payday Lending

Dolores Huerta, Co-founder of UFW, Dolores Huerta Foundation and long-time advocate for workers discusses payday lending and its impact on working families.

Payday loans are small, short-term loans secured by a borrower's personal check that carry interest rates of 459 percent APR for a typical two-week loan. The high-cost and short-term ensure that cash-strapped borrowers will be unable to meet their basic expenses and pay off their loan with their next paycheck. Consequently, too many Californians are forced to pay off one loan and immediately take out a new loan, repeating the cycle over and over. Payday lenders argue that their loans are for emergency use and not for chronic budget shortfalls, but not only do payday loans cause budget shortfalls, but data indicate that most California borrowers take out 10 loans per year. 

Eighteen states, the District of Columbia and the Department of Defense (for members of the military) prohibit extremely high cost payday lending. This year, California Senator Hannah-Beth Jackson has introduced a bill (SB 515) that proposes a series of reforms to allow payday loans to better serve their advertised purpose while making the loans safer for consumers.