Payday Lending in Louisiana

Together Baton Rouge

A presentation on Payday Lending in Louisiana. Shared at the Together Louisiana Statewide problems Conference on February fifteenth, 2014.

Function as very very first to such as this

1. 1. Payday Lending in Louisiana Statewide Issues Conference 15th, 2014 february
2. 2. whom? HOW? WHAT?
3. 3. Whom Works On The Pay Day Loan?
4. 4. Families with kids making $15,000 — $40,000 per year Disproportionately AfricanAmerican or Latino bad Credit History want extra cash for emergencies and fundamental cost of living Social Security Recipients
5. 5. Just exactly just How many individuals simply take down payday loan in Louisiana?
6. 6. Payday really loves Louisiana 23percent of Louisiana households count on predatory financing 6th highest when you look at the country US Normal: 18% About 57,000 Louisiana households remove loans that are payday year supply: Louisiana Budget venture
7. 7. Payday Enterprize Model
8. 8. Payday company Model Billions & billions served # of McDonalds # of Payday Shops 12,800 20,600 230 936
9. 9. Payday enterprize model = numerous perform loans plus the financial obligation trap. Many pay day loans go to “immediate perform borrowers” New loans made within a bi weekly duration 76% Loans to one-time users 2% Initial loans to duplicate users 11% brand New loans after 14-30 day pause 6% brand brand New loans after 30 time pause 5%
10. 10. Payday enterprize model = repeat that is multiple therefore the financial obligation trap. Many payday revenue comes from “more loans per customer”
11. 11. Payday enterprize model = numerous perform loans together with debt trap. Into the their very own terms … “in just about any big, mature pay day loan profile, loans to duplicate borrowers generally constitute between 70 and 90 per cent associated with profile, as well as some loan providers, much more.” – Community Financial Services of America (leading industry trade association that is payday
12. 12. Payday enterprize model = repeat that is multiple as well as the debt trap. When you look at the their very own terms … “The concept in the industry is you have got to have that customer in, strive to turn him right into a customer that is repetitive long-lasting client, for the reason that it’s where in actuality the profitability is.” – Dan Freeman, CEO of Cash America
13. 13. Debt Period
14. 14. Interest Rates apr (APR) Average 30-year mortgage scholar Loan car loan Sub-prime mortgage Credit Cards PAYDAY ADVANCES as much as 5% 8% 2% 8% 12% 23% 8% 15% 15% 36% 150% 782% supply: Louisiana Budget venture
15. 15. How exactly does this work? ? ? ? ? ?
16. 16. just How pay day loans carry triple digit APR’s Payday Loan Amount $100 + Interest ____+ 16.75%________ Amount owed = $116.75 ____16.75 percent X 26 Two-week periods Two-week durations 1 = 436% APR Plus fees of $10 PER LOAN brings APR to 696% year!
17. 17. Supply: Louisiana Budget Venture
18. 18. Individuals who remove an online payday loan are as more likely to file for bankruptcy as individuals REJECTED for pay day loan of individuals in BR who seek bankruptcy relief do this, to some extent, as a result of pay day loans Payday borrowers are because prone to have filed for bankruptcy in final 5 years supply: Louisiana Budget venture
19. 19. Payday hurts our economy cash consumed costs and interest is cash lost to Louisiana families and state economy Amount in payday costs and interest obtained from Louisiana families PER YEAR (2011 numbers) $196,394,987 supply: Insight Center for Economic developing, “The Net Economic Impact of Payday Lending within the U.S.”, 2013
20. 20. Payday hurts our economy web jobs lost ANNUALLY as a result of economic effect of payday financing 671 jobs lost (each year) Source: Insight Center for Economic developing, “The Net Economic Impact of Payday Lending into the U.S.”, 2013
21. 21. Where are pay day loan stores during my town?
22. 22. Alexandria # of payday loan providers 29 Source: Louisiana Budget Project
23. 23. Shreveport / Bossier City # of payday loan providers 78 supply: Louisiana Budget venture
24. 24. New Orleans # of payday loan providers 45 supply: Louisiana Budget venture
25. 25. Monroe # of payday loan providers 30
26. 26. Lake Charles # of lenders that are payday
27. 27. Lafayette # of payday loan providers 39 supply: Louisiana Budget venture
28. 28. Baton Rouge # of payday loan providers 85 (State Capitol of Payday) supply: Louisiana Budget venture
29. 29. exactly just How did this take place? • Louisiana has “usury laws”, preventing loans with rates of interest more than 12%. • Louisiana legislature passed a legislation in 1990s EXEMPTING payday loan providers from usury guidelines (“Louisiana Deferred Presentment and Small Loan Act”) • Legislature passed a legislation this season enabling GREATER FEES for payday advances. (that do you imagine they’re hearing from?)
30. 30. Exactly what are other states doing? GEORGIA Regulates payday lending through legislative action: limit at 16% APR interest. – The regulation reduced the sheer number of people whoever bank reports had been involuntarily closed as a result of repeated overdrafts by 11-16 % ARIZONA this year, passed a limit of 36% APR, which particularly relates to pay day loans.
31. 31. Exactly what are other states doing? ARKANSAS State Supreme Court ruled that Payday Lending violates state usury regulations – final payday lending store left their state last year. VERMONT Regulated payday lenders in 2006 through legislative action. – Families spared very nearly $100 million/year – Former borrowers reported an effect that is“positive to their individual funds
32. 32. Exactly what are other states doing? TEXAS Taking a city-by-city approach – Dallas, Austin, San Antonio, and El Paso manage where payday lenders operate, just how they issue loans and whatever they charge in interest and fees. WASHINGTON STATE – Capped the final number of payday loans that may be lent to any person from any organization at 8 each year. – quantity of yearly pay day loan transactions dropped from 3.2 million to 856,000.
33. 33. “Military Lending Act” (2007) Prohibits payday loan providers from recharging APR’s above 36 per cent to active army workers and their dependents. – The Pentagon discovered that armed forces personnel collectively paid over $80 million of these salaries toward charges every year. – Department of Defense: “Predatory lending undermines army readiness, harms the morale of troops and their own families, and enhances the price of fielding an all volunteer fighting force.”
34. 34. You will find options to Payday! Examples: Louisiana Federal Credit Union provides affordable, short-term loan item: – $300 loan, with maximum of 15% APR. ASI Credit Union offers “Stretch Loan” of between – $200 to $500 loan, with 12% APR. MORE MANY usage alternatives in states that control Payday Lending
35. 35. HOME MEETINGS Share tale about how precisely financial obligation has affected you or somebody you realize?