Magazine article American Banker

Fewer Payday Loans Made in States with Strict Laws: Study

Magazine article American Banker

Fewer Payday Loans Made in States with Strict Laws: Study

Article excerpt

Byline: Victoria Finkle

Stricter state regulation of payday lenders slows use of the loans and doesn't drive borrowers to online or out of state, says the Pew Charitable Trusts in a new report unveiled Wednesday.

The report, "Payday Lending in America: Who Borrows, Where They Borrow, and Why," is based on an in-depth survey and focus groups with hundreds of payday borrowers around the country, conducted by Pew's Safe Small-Dollar Loan Research Project.

In states with strict regulations on the short-term, small dollar loans, just 2.9% of adults say they've used a payday loan within the last five years, the report says. Meanwhile, more than 6% of adults surveyed had borrowed in states with more lenient laws.

"In states that enact strong legal protections, the result is a large net decrease in payday loan usage; borrowers are not driven to seek payday loans online or from other sources," the report says. …

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