Half of Repeat Payday Loans Opened Immediately or After 24 Hour Wait

Advertising Disclosure

Another blog post to further along our campaign against the payday loan industry!! According to the Center for Responsible Lending, payday lenders create their own demand with loan terms that generate rapid re-borrowing.

This is termed “payday churning”, or repeat borrowing of what payday lenders market as a short-term loan of a few hundred dollars. Low income workers are especially susceptible to this kind of lending, as the loan fees often make it impossible for them to pay off their loans with upcoming paychecks. For instance, if a payday lender charges $60 on a $350 loan, this can make it impossible for a borrower to ever get ahead.

  • Half of repeat loans are opened at the borrower’s first opportunity, immediately or after a 24-hour waiting period, depending on state rules.
  • 87% of repeat loans are opened within two weeks, or generally before their next payday.
  • Only 6 percent of subsequent payday loans are taken out longer than a month after a previous loan was paid off.

This rapid, widespread re-borrowing indicates that most payday borrowers are not able to both repay one of these loans and clear a monthly billing cycle before having to borrow again. In essence, the bulk of payday loan demand comes from borrowers who are taking out a payday loan to repay a payday loan.

The Center for Responsible Lending’s website: http://www.responsiblelending.org/.

For more information about payday loans, see our articles on payday loans. Have you been stuck in the payday loan trap? Tell us about it!

Copy link
Powered by Social Snap