Payday Lending in Louisiana

Together Baton Rouge

A presentation on maximus money loans app 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 February fifteenth, 2014
  2. 2. whom? HOW? WHAT?
  3. 3. Whom Works On The Pay loan day?
  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 bills Social Security Recipients
  5. 5. Exactly exactly How lots of people simply take down payday loan in Louisiana?
  6. 6. Payday really loves Louisiana 23percent of Louisiana households depend on predatory lending 6th greatest within the country US typical: 18% About 57,000 Louisiana households sign up for pay day loans per year supply: Louisiana Budget venture
  7. 7. Payday Business Structure
  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 additionally the debt trap. Most loans that are payday to “immediate repeat borrowers” New loans made within a bi weekly duration 76% Loans to one-time users 2% Initial loans to duplicate users 11% brand brand New loans after 14-30 day pause 6% New loans after 30 time pause 5%
  10. 10. Payday Business Model = repeat that is multiple while the debt trap. Most revenue that is payday from “more loans per customer”
  11. 11. Payday Business Model = numerous perform loans together with financial obligation trap. Within the their very own terms … “in just about any big, mature cash advance profile, loans to duplicate borrowers generally constitute between 70 and 90 per cent regarding the portfolio, and for some loan providers, much more.” – Community Financial Services of America (leading industry trade association that is payday
  12. 12. Payday enterprize model = numerous perform loans in addition to financial obligation trap. Into the their particular words … “The concept in the industry is you need to get that customer in, strive to make him into a customer that is repetitive long-lasting consumer, because that’s where in fact 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 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 exactly does this work? ? ? ? ? ?
  16. 16. 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 remove an online payday loan are as more likely to seek bankruptcy relief as people 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 since very likely to have filed for bankruptcy in final 5 years supply: 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 fees and interest obtained from Louisiana families PER 12 MONTHS (2011 numbers) $196,394,987 supply: Insight Center for Economic Development, “The Net Economic Impact of Payday Lending within the U.S.”, 2013
  20. 20. Payday hurts our economy Net 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 into 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 loan providers 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. Just just exactly How did this take place? • Louisiana has “usury laws”, preventing loans with rates of interest greater 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 year INCREASED that is allowing FEES payday advances. (Who do you believe 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 were involuntarily closed as a result of repeated overdrafts by 11-16 % ARIZONA this year, passed a cap of 36% APR, which particularly relates to payday advances.
  31. 31. What exactly are other states doing? ARKANSAS State Supreme Court ruled that Payday Lending violates state usury rules – final payday lending store left their state during 2009. VERMONT Regulated payday loan providers in 2006 through legislative action. – Families stored very nearly $100 million/year – Former borrowers reported an effect that is“positive on their individual funds
  32. 32. What exactly are other states doing? TEXAS Taking a city-by-city approach – Dallas, Austin, San Antonio, and El Paso manage where payday lenders operate, exactly exactly how they issue loans and what they charge in interest and fees. WASHINGTON STATE – Capped the final amount of payday loans that may be lent to any person from any business at 8 each year. – amount of annual cash advance transactions dropped from 3.2 million to 856,000.
  33. 33. “Military Lending Act” (2007) Prohibits lenders that are payday charging you APR’s above 36 per cent to active army personnel 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 options 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 use that is PEOPLE in states that control Payday Lending
  35. 35. HOME MEETINGS Share tale about how exactly financial obligation has impacted you or some body you understand?