DYK (Did you know?): Payday loans
Payday loans have become a way for some people to get money when they need it quickly, but it can come at a high cost and quickly recreate a ‘quicksand’ effect where borrowers take out additional loans to cover outstanding loans. WHello the demand for small dollar loans has plummeted 67percent during COVID-19 confinement, the commercial group Alliance of Online Lenders believe recoverYes at pre-Covid levels may not come for a while. Here are some facts about payday loans:
– 12 million Americans use payday loans each year.
– In 2017, there were 14,348 payday loan stores in the United States (there were only 14,027 McDonalds stores).
– The typical payday borrower is in debt five months a year and the average income of payday borrowers is $ 30,000 a year.
– 7 in 10 of those who take payday loans use them for regular recurring expenses such as utility bills and rent payments and average $ 375.
– Each year, $ 9 billion is paid in payday loan fees, with only 14% of borrowers able to repay their loans.
– The average annual interest rate (APR) for payday loans is 396%.
– Payday loans are used by all generations, but mainly by Millennials and Gen-Xers. Millennial use of payday loans (To win, Dave and Carillon) has led to an increase in online payday loans and cash advance applications.
– Seventeen states and the District of Columbia have banned payday loans or set interest rate caps.
– Many payday loans have maturities of just a few weeks and carry an astonishing annual interest rate of up to 300 percent.
– The Consumer Financial Protection Bureau report indicates that more than 80 percent payday loans are converted into new loans before they are fully repaid.
– Monthly borrowers are disproportionately likely to stay in debt for 11 months or more.
– The total outstanding personal debt in the United States is $ 143 billion.
– There are 21.1 million personal loans outstanding in the United States
– The Aaverage interest rates for personal loans vary between 10 percent and 28 percent.
– According to data compiled by TransUnion, the answer is Gen X’ers, which recorded an average loan balance of $ 9,522.
– On average, payday loan users spend $ 520 in fees to borrow $ 375.