Payday Lending in America: Who Borrows, Where They Borrow, and Why
QUICK SUMMARY
This report-the first in Pew’s Payday Lending in America series-answers major questions about who borrowers are demographically; how people borrow; how much they spend; why they use payday loans; what other options they have; and whether state regulations reduce borrowing or simply drive borrowers online.
Key Findings
Twelve million American adults use payday loans annually. On average, a borrower takes out eight loans of $375 each per year and spends $520 on interest.
Pew’s survey found 5.5 percent of adults nationwide have used a payday loan in the past five years, with three-quarters of borrowers using storefront lenders and almost one-quarter borrowing online. State re gulatory data show that borrowers take out eight payday loans a year, spending about $520 on interest with an average loan size of $375. Overall, 12 million Americans used a storefront or online payday loan in 2010, the most recent year for which substantial data are available.
Most payday loan borrowers are white, female, and are 25 to 44 years old. However, after controlling for other characteristics, there are five groups that have higher odds of having used a payday loan: those without a four-year college degree; home renters; African Americans; those earning below $40,000 annually; and those who are separated or divorced. It is notable that, while lower income is associated with a higher likelihood of payday loan usage, other factors can be more predictive of payday borrowing than income. For example, low-income homeowners are less prone to usage than higher-income renters: 8 percent of renters earning $40,000 to $100,000 have used payday loans, compared with 6 percent of homeowners earning $15,000 up to $40,000.
Most borrowers use payday loans to cover ordinary living expenses over the course of months, not unexpected emergencies over the course of weeks. cash advance til payday Portsmouth, OH The average borrower is indebted about five months of the year. Continue Reading Payday Lending in America: Who Borrows, Where They Borrow, and Why