Payday Lending in Louisiana

Payday Lending in Louisiana

Together Baton Rouge

A presentation on Payday Lending in Louisiana. Provided at the Together Louisiana netcredit loans near me Statewide problems Conference on February fifteenth, 2014.

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  1. 1. Payday Lending in Louisiana Statewide problems Conference February fifteenth, 2014
  2. 2. whom? HOW? WHAT?
  3. 3. Whom Works On The Pay loan day?
  4. 4. Families with kids making $15,000 — $40,000 per year Disproportionately AfricanAmerican or Latino bad Credit History Need extra cash for emergencies and fundamental cost of living Social Security Recipients
  5. 5. Just exactly exactly How many individuals just take down payday loan in Louisiana?
  6. 6. Payday really really loves Louisiana 23percent of Louisiana households count on predatory financing 6th greatest when you look at the country US typical: 18% About 57,000 Louisiana households remove loans that are payday year supply: Louisiana Budget Project
  7. 7. Payday Enterprize Model
  8. 8. Payday company Model Billions & billions served # of McDonalds # of Payday stores 12,800 20,600 230 936
  9. 9. Payday enterprize model = numerous perform loans as well as 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 New loans after 14-30 day pause 6% brand brand brand New loans after 30 time pause 5%
  10. 10. Payday Business Model = repeat that is multiple plus the financial obligation trap. Many payday revenue comes from “more loans per customer”
  11. 11. Payday enterprize model = repeat that is multiple therefore the financial obligation trap. Within the their very own terms … “in just about any big, mature cash advance portfolio, loans to duplicate borrowers generally constitute between 70 and 90 % regarding the profile, as well as some loan providers, a lot more.” – Community Financial Services of America (leading payday industry trade association)
  12. 12. Payday enterprize model = repeat that is multiple as well as the financial obligation trap. Into the their very own terms … “The concept in the industry is you need to get that customer in, strive to show him right into a customer that is repetitive long-term client, because that’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 Auto Loan Sub-prime mortgage Credit Cards PAY DAY LOANS 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 just How payday advances 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 Project
  18. 18. Individuals who remove an online payday loan are as very likely to seek bankruptcy relief as individuals REJECTED for pay day loan of men and women in BR who seek bankruptcy relief achieve this, in component, as a result of pay day loans borrowers that are payday because expected to have filed for bankruptcy in final 5 years Source: Louisiana Budget venture
  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 YEAR (2011 figures) $196,394,987 supply: Insight Center for Economic developing, “The Net Economic Impact of Payday Lending when you look at 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) supply: Insight Center for Economic developing, “The Net Economic Impact of Payday Lending within the U.S.”, 2013
  21. 21. Where are pay day loan stores 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 lenders 45 supply: Louisiana Budget venture
  25. 25. Monroe # of payday loan providers 30
  26. 26. Lake Charles # of payday loan providers 30
  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 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 legislation (“Louisiana Deferred Presentment and Small Loan Act”) • Legislature passed a legislation this year INCREASED that is allowing FEES payday advances. (that do you might think 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 amount of people whose bank records had been involuntarily closed as a result of repeated overdrafts by 11-16 percent ARIZONA this season, 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 – last lending that is payday left their state during 2009. VERMONT Regulated payday loan providers in 2006 through legislative action. – Families conserved nearly $100 million/year – Former borrowers reported a “positive effect” on the 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 exactly exactly how they issue loans and whatever they charge in interest and costs. WASHINGTON STATE – Capped the number that is total of loans which can be lent to your 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 lenders that are payday billing APR’s above 36 per cent to active army workers and their dependents. – The Pentagon unearthed that army personnel collectively paid over $80 million of the salaries toward costs 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 will find alternatives to Payday! Examples: Louisiana Federal Credit Union provides 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 MANY usage alternatives in states that control Payday Lending
  35. 35. HOUSE MEETINGS Share tale about how precisely financial obligation has impacted you or somebody you understand?

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