Fast Facts--Payday Loans
- Since its inception in the 1990s, the payday lending industry has established over 22,000 locations which originate an estimated
$27 billion in annual loan volume.
- Nationally, there are more than two payday lending storefronts for every Starbucks location.
- The typical two-week payday loan has an annual interest rate ranging from 391 to 521 percent.
- The“churning” of existing borrowers’ loans every two weeks accounts for three-fourths of all payday loan volume.
- Repeated payday loans result in $3.5 billion in fees each year.
- Loans to non-repeat borrowers account for just two percent of the payday loan volume.
- The average payday borrower has nine transactions per year.
- 90% of the payday lending business is generated by borrowers with five or more loans per year, and over 60% of
business is generated by borrowers with 12 or more loans per year.
- If a typical payday loan of $325 is flipped eight times, the borrower will owe $468 in interest; to fully repay the loan and principal, the borrower will need to pay $793.
- The typical payday borrower remains in payday loan debt for 212 days of the year.
- From 2008-2010, voters in three states have said ‘NO’ to triple digit interest rates when their state legislatures did not: Arizona, Montana and Ohio.
- Seventeen states and the District of Columbia have enacted double-digit rate caps on payday loans.
- Studies have shown that payday borrowers are more likely to have credit card delinquency, unpaid medical bills, overdraft fees leading to closed bank accounts, and even bankruptcy.