At a press conference today in front of a payday lending store in downtown San Jose, Representative Zoe Lofgren, Emmett Carson, the CEO of Silicon Valley Community Foundation, and Kyra Kazantzis of the Coalition Against Payday Predators (CAPP) warned consumers not to be grinched by payday lenders during the holiday season. Each spoke at the event about the harm caused to borrowers and in California communities by payday lending, alternatives for consumers and efforts to rein in payday lending abuses and end the "debt trap."
Graciela Aponte, California External Relations Director for the Center for Responsible Lending (CRL), issued the following statement.
The average interest rate for a payday loan in California is 459%. These loans are advertised as a one-time quick fix, but they are debt traps by design. Most borrowers will not be able to cover their living expenses and pay back a loan with such a predatory interest rate. Month after month, hundreds of thousands of Californians are paying money to payday lenders that they would otherwise use to invest in their futures or spend in their towns and small businesses.
Polling shows the vast majority of Californians want to end the abusive interest rates charged by payday lenders. We hope that today's event will increase momentum for much-needed reforms and ensure that anyone considering taking out a payday loan during the holiday season thinks twice.
- According to a recent poll by CRL, 73% of Californians would vote for a ballot measure to reduce the interest rate on payday loans to 36%.
- Industry data shows payday loan volume spikes during the holidays, and payday lenders use holiday advertising to target consumers. Research also shows the loans hurt borrowers for months and years to come by trapping them in a cycle of repeated borrowing.
- A Center for Responsible Lending (CRL) analysis of two California Department of Business Oversight reports shows that payday lenders, who advertise their produces as a one-time quick fix for consumers facing a cash crunch, generate 76% of their revenue from borrowers who take out 7 or more loans a year. In the last year, almost 800,000 Californians were stuck in 7 or more payday loans during the year.
For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Andrew High at Andrew.High@responsiblelending.org or 919-313-8533.