I stumbled upon this study by accident as I was going through some payday loan news alerts. I thought I would share it with everyone.
That article was titled “Study is in.” Which really did not explain much, and was extremely vague, which is probably why I missed it, so I titled mine “Pew charitable trust study is in on payday loans.”
I figured this title told a much better story. Seems the results are not very surprising to those of us who follow this business. I was a bit surprised by the overall numbers of people who are actually living on payday loans.
The Study Results
Some of the following numbers are a bit disturbing. It seems we have a group of people that are constantly in need of short term cash and so far our answer to this is payday loans, title loans and cash advance loans.
By taking a look at the overall picture one can see all these loans do is add to the problem by trapping these people into the cycle of treadmill borrowing.
Some study facts:
- Most people are paying over $500.00 in interest and taking up to 5 weeks to pay off the average $375.00 payday loan
- About 14% of people can afford to pay the full payment of their loan. Everyone else is able to make the interest payment, but can not afford the whole payoff amount, leading to treadmill borrowing and roll overs, otherwise known as the payday loan trap.
- Over 41 % of borrowers needed help from another source besides their paychecks to pay off their payday loans.This includes help from family, friends, pawn shops, another payday loan.
- One in Six people have used their tax refund to settle up with payday loan companies.
- 58% of borrowers are in need of extra money on a regular basis. These are not people in need of short term emergency money, these are people who are in need of low interest longer term loans.
Summary
There is no doubt this country has a problem with payday lending, and that people are getting taken advantage of on a day to day basis.
As long as this continues to happen we will be here helping people fight back!