Politicians have been batting around the issue of payday lending. In the United Kingdom, the number of pay day loans taken out in 4 years has quadrupled. In states as diverse as Montana, Arizona, and Ohio, new legislation that limits payday lending has been passed. Payday loan interest would be capped at 36 percent or higher interest, if S. 3245 passes the US Senate.
Comprehending the numbers of pay day loans
Understanding the payday advance market and its customers is complicated by ubiquitous inaccurate and conflicting data. A recent report by Personal Money Store shows that though there are many things about payday cash advances that are simply not supported by research. Most cash advance or short-term credit customers make over $ 47,000 in a year and have been working at one job for four years or more. Over 90 percent of customers who take out payday loans say they comprehend the charges they are paying. At the exact same time, only about one-fifth of credit card customers comprehend their charges, according to a record by creditcards.com.
The data of payday lending and short term credit
Over 20 percent of applications at brick and mortar cash advance stores are rejected. Up to 99 percent of online cash advance applications are rejected. Over 20 percent of short-term loans, even with these high standards, have to be entirely written off as a total loss. Most payday loan lenders report 8 to 10 percent profit. In comparison, Goldman Sachs reported 27 percent profit.
Making the political debate more substantive
It can be difficult to find a debate about payday lending that has been informed by statistics. Accurate data are incredibly vital, because legislation in the senate is pending.
