Average Payday Loan in Utah Has Triple-Digit Interest

November 15, 2013
Salt Lake Tribune 
payday lending news

There are now 565 payday lending and title loan locations in Utah, providing short-term advances at an average interest rate of nearly 500 percent. At least one firm company charged 1,564 percent annual interest last year, collecting $30 in interest each week for every $100 loaned, new state data show. Utah residents required an average 33 days to repay payday loans, meaning they had to extend the loans at least twice beyond the original two-week term. The statistics are reigniting debate over whether the loans are simple usury or a way for low-income consumers to avoid more expensive alternatives such as check-overdraft charges or fees for reconnecting utilities.

"Payday lenders have continually told legislators that people can afford these loans, and that most people pay them off on time," said Linda Hilton, director of the Coalition of Religious Communities, which advocates for the poor. "This data shows that’s simply not true. They trap people so that they have a hard time escaping the high interest they can’t afford." Utah, she points out, is one of the few states with no limit on interest rates. Laws do not allow payday lenders to add interest beyond 10 weeks after the loan is made, but Hilton says that many lenders convince consumers to take out new loans to avoid overdraft fees on the check they provided originally or to avoid further credit damage. The data also show that 2,939 people used a state provision that allows them to cancel a payday loan within 24 hours without penalty -- which Hilton called "wonderful."

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