Oakland, Calif.—According to a recent poll of registered San José voters, liquor stores and check-cashers are more popular than payday lenders, with payday lenders' unfavorable rating reaching 52 percent while liquor stores and check-cashers had unfavorable ratings of 34 and 46 percent, respectively.
Payday lenders make small, short-term loans secured by a borrower's post-dated personal check that carry interest rates of 459 percent APR for a typical two-week period. The loans entrap Californians in a cycle of debt because most borrowers are unable to repay the loan in two weeks with enough left over to pay for other essential expenses. Borrowers are then forced to take out loan after loan – in California, typically as many as 10 per year.
"Polls and elections from across the country have demonstrated over the years that the only folks who really like payday loans are payday lenders," said Paul Leonard, director of the California office of the Center for Responsible Lending, which sponsored the poll. "San José voters agree with voters nationwide: payday loans are flawed products that trap people in cycles of high-cost debt. And it's very likely that the rest of California would agree too."
The November 2010 poll was conducted by Goodwin Simon Strategic Research to gauge public opinion of a potential moratorium on issuing new licenses to payday lenders to operate in the City of San José. The poll also addressed a recommendation that payday lenders abide by a "Good Neighbor Policy," which would include limiting signage and hours of operation, reducing litter, and posting the full cost of payday loans. Sixty-three percent of voters supported the idea of a two-year moratorium on new payday loan stores.
"Payday loans are harmful products, and this poll demonstrates that San José voters know it," said Councilmember Ash Kalra, who represents San José's 2nd District. Councilmember Kalra is one of the council members recommending that the City regulate payday lending through its land use powers. "We need to respect the views of our residents and voters by reining in payday lending," Kalra said. The San José City Council voted in December to study the potential impacts on the city of a moratorium on new payday lending stores.
The opposition to high-cost payday lending in San José is similar to public opinion in other states. In 2010, Montana passed by a 3-1 margin a ballot initiative limiting annual interest rates on payday loans to double-digits, as Ohio and Arizona did in 2008. In other parts of the country, such as Iowa, Virginia and Kentucky, where recent statewide polls have been conducted to measure support for a limit to the amount of interest payday lenders can charge, both Republican and Democratic voters have responded overwhelmingly: 69-73 percent of voters in each of these states favors a 36% APR cap.
The poll was conducted November 11-14, 2010 with 400 interviews of San José voters drawn from the official county voter file, and included both landline and wireless telephone numbers. The study has a margin of error of plus or minus 5 percent at a 95 percent confidence level.
Funding for the poll was provided by Silicon Valley Community Foundation. Goodwin Simon Strategic Research is an opinion research firm with offices in Oakland and Los Angeles. Visit www.responsiblelending.org/california to read the pollster's report.
For more information: Ginna Green at (510) 379-5513 or email@example.com.