Payday Lending in Louisiana

Together Baton Rouge

A presentation on Payday Lending in Louisiana. Provided at the Together Louisiana Statewide problems Conference on 15th, 2014 february.

Function as the 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 Uses a Pay Day Loan?
4. 4. Families with kiddies making $15,000 — $40,000 per year Disproportionately AfricanAmerican or Latino Poor Credit History want extra cash for emergencies and fundamental cost of living Social Security Recipients
5. 5. exactly How lots of people simply take away payday loan in Louisiana?
6. 6. Payday really really loves Louisiana 23percent of Louisiana households count on predatory financing 6th greatest into the nation US Normal: 18% About 57,000 Louisiana households sign up for loans that are payday year supply: Louisiana Budget Project
7. 7. Payday Business Design
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 and also the financial obligation trap. Many pay day loans go to “immediate perform borrowers” New loans made within a bi weekly period 76% Loans to one-time users 2% Initial loans to duplicate users 11% brand 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 plus the financial obligation trap. Many revenue that is payday from “more loans per customer”
11. 11. Payday enterprize model = numerous perform loans together with debt trap. Within the their very own terms … “in just about any large, mature cash advance portfolio, loans to duplicate borrowers generally constitute between 70 and 90 per cent associated with the portfolio, 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 = numerous repeat loans and also the financial obligation trap. When you look at the their terms … “The concept in the commercial is you need to get that customer in, work to turn him in to a repeated client, long-term client, for the reason that it’s where in actuality the profitability is.” – Dan Freeman, CEO of money America
13. 13. Debt Period
14. 14. Interest Rates apr (APR) Average 30-year mortgage scholar Loan car loan Sub-prime home loan 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 can this work? ? ? ? ? ?
16. 16. Just exactly exactly How payday advances carry triple digit APR’s Payday Loan Amount $100 + Interest ____+ 16.75%________ Amount owed = $116.75 ____16.75 per cent 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. Those who take out a quick payday loan are as prone to seek bankruptcy relief as individuals REFUSED for pay day loan of individuals in BR who seek bankruptcy relief achieve this, in component, as a result of pay day loans Payday borrowers are because very likely to have filed for bankruptcy in final 5 years supply: Louisiana Budget Project
19. 19. Payday hurts our economy cash drawn in costs and interest is cash lost to Louisiana families and state economy Amount in payday costs and interest obtained from Louisiana families PER 12 MONTHS (2011 numbers) $196,394,987 supply: Insight Center for Economic developing, “The Net Economic Impact of Payday Lending into the U.S.”, 2013
20. 20. Payday hurts our economy web jobs lost EVERY YEAR as a result of financial effect of payday financing 671 jobs lost (each year) Source: Insight Center for Economic developing, “The Net Economic Impact of Payday Lending within the U.S.”, 2013
21. 21. Where are pay day loan shops within my town?
22. 22. Alexandria # of payday loan providers 29 Source: Louisiana Budget venture
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. just exactly 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 rules (“Louisiana Deferred Presentment and Small Loan Act”) • Legislature passed a legislation this season INCREASED that is allowing FEES payday advances. (Who do you might think they’re hearing from?)
30. 30. What exactly 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 pertains to payday advances.
31. 31. Exactly what are other states doing? ARKANSAS State Supreme Court ruled that Payday Lending violates state usury regulations – last lending that is payday left their state last year. VERMONT Regulated payday loan providers in 2006 through legislative action. – Families conserved very nearly $100 million/year – Former borrowers reported a “positive effect” on the personal funds
32. 32. What exactly are other states doing? TEXAS Taking a city-by-city approach Dallas that is, San Antonio, and El Paso manage where payday lenders operate, exactly just how they issue loans and whatever they charge in interest and fees. WASHINGTON STATE – Capped the number that is total of loans that may be lent to any person from any organization at 8 each year. – quantity of yearly loan that is payday dropped from 3.2 million to 856,000.
33. 33. “Military Lending Act” (2007) Prohibits payday loan providers from recharging APR’s above 36 % to active army personnel 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 loved ones, and enhances the price of fielding an all volunteer fighting force.”
34. 34. You can find options to Payday! Examples: Louisiana Federal Credit Union offers affordable, short-term loan item: – $300 loan, with maximum of 15% APR. ASI Credit Union provides “Stretch Loan” of between – $200 to $500 loan, with 12per cent APR. MORE use that is PEOPLE in states that control Payday Lending
35. 35. HOME MEETINGS Share a whole tale exactly how financial obligation has impacted you or some one you realize?