Who in the US is utilizing payday loans in 2022?

By: Barry Bridges

According to statistics on payday loans, those who utilize these types of cash advances are often persons in severe need of money who have few other alternatives for short-term loans with lower interest rates. This is because payday loans have high-interest rates.

You’ve undoubtedly heard of payday loans, even if you’ve never needed one. Many Americans who are short on cash rely only on these ultra-short-term, high-interest loans. But as these data on payday loans demonstrate, there are many things to watch out for a while utilizing this financial service. People who need money but lack the resources to get it via more conventional ways might benefit significantly from the payday loan business. At the same time, if borrowers fail to recognize the hazards, their essential character may be predatory. Hopefully, these statistics and the accompanying FAQ will increase your knowledge of this service and better equip you to use it without getting into debt.

Statistics Regarding Payday Loans (Editor’s Pick)

  • On average, payday loan borrowers pay $510 in fees to borrow $370.
  • Those earning less than $42,000 annually are 62.2% more likely to use payday loans.
  • Payday loan utilization is much more common among those between the ages of 25 and 50.
  • The annual percentage rate (APR) on a $300 payday loan in the US may reach 664%.

Frequently Asked Questions (FAQ)

How large is the market for payday loans?

According to various industry data, the yearly revenue of the payday loan sector from interest and fees is roughly $6 billion. This is derived from loans totaling close to $35 billion.

How are payday loans funded?

Payday lenders profit by imposing high-interest rates on short-term loans and costs associated with the borrowing procedure. Renewing loans to defaulters generates a significant portion of the payday lending industry’s revenue—more than 90% in certain situations.

Which states forbid payday loans?

Thirteen states, Arizona, Arkansas, Connecticut, Georgia, Maryland, Massachusetts, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Vermont, and West Virginia, do not permit payday loans. Additionally, payday loans are not allowed in the District of Columbia.

What is the highest amount for a payday loan?

According to statistics on payday lending, the average amount of a single payday loan is $1,500.

What is the typical APR for a payday loan?

Payday loans have annual interest rates of over 400% on average.

What is the maximum interest and charge rate for payday loans?

While interest and charge limitations on payday loans are in place in several states, the specific amounts vary by jurisdiction. At the time of writing, conditions with no limits on payday loan interest rates or fees include Idaho, South Dakota, Texas, and Wisconsin.

What proportion of Americans make use of payday lenders?

According to the findings of a poll conducted by the Pew Charitable Trusts, around 4% of all Americans make use of payday loans on an annual basis.

Do payday lenders run a credit check?

No, most payday lenders do not do a credit check before lending. This is one of the factors that make these loans expensive and high-risk.

Does taking out a payday loan hurt your credit score?

In the US, payday loans typically don’t appear on your credit record, so they don’t harm or enhance your credit. Payday loan data suggest that if your debt is turned over to a collection agency after several delays or defaults, it may lower your credit score.

How many debtors are unable to repay their payday loans?

According to various research, only 15% to 22% of people who utilize payday loans can pay them back on time.

What happens if you are unable to repay a payday loan?

One or more of the following things may occur if you are unable to repay your payday loan:

There is a possibility that you may incur other costs;

The payday lender will turn to a third-party debt collection agency after trying unsuccessfully to get the money from you. These businesses use more forceful methods to persuade you to pay. According to data on payday loans, lenders often contact collection agencies after 60 days of attempting;

Your credit score might be affected if a collection agency is given control of your debt;

You might be sued by the lender or the debt collector for unpaid debts. Your property may be subject to liens or have your wages garnished as a result;

You can also find it challenging to get financing in the future if your credit score drops or if your credit record shows that you made a default.

How long does it take a payday loan to be repaid?

Your credit record will include a late payday loan for up to seven years.

Is not paying back a payday loan a crime?

No, you cannot be arrested for defaulting on a payday loan in the US since it is not a criminal. Despite this, data on payday lending reveal that many collection firms unlawfully threaten to have debtors arrested.

Can you be sued for a payday loan?

Although not necessarily a crime, defaulting on a payday loan may result in legal action in a civil court.

Can you have several payday loans open at once?

There are many payday loans open at once. However, the screening procedure is more stringent under the new CFPB regulations. Even for modest loans, you must pay back at least a third of the previous loan before applying for a new one. According to payday lending statistics, you may also be required to demonstrate your capacity to repay all of your loans.

Can you get two payday loans from several locations?

The same regulations apply when taking out a loan from two or more distinct payday lenders. Although it is theoretically conceivable since lenders may look up any existing loans on your bank statements, you are more likely to acquire a second loan only if you demonstrate your capacity to pay back the first one.

How many payday loans are refinanced?

According to the latest data on payday loans in the United States, just under 80% of payday loans are obtained within two weeks after repaying an earlier loan. This indicates that roughly four out of every five borrowers of payday loans do so again.

Summary

Even while not all payday lenders are attempting to take advantage of you, the business as a whole has several peculiar traits that make consumers more vulnerable. This makes it even more crucial to only rely on reliable US payday loan companies if you want immediate short-term funding. In any event, we hope that knowing this data about payday loans will make you more cautious when you contact a lender in the future.

 

Senior Personal Finance Writer at Paydaypact | + posts

Barry is a seasoned professional in content with a wealth and depth of knowledge in the field of editing that contributed to the success of our team. He is a sharp, precise editing eye, an in-depth comprehension of structure and story and has a wealth expertise in grammar and the structure of English. He has a keen understanding of writing for bad credit loans as well giving advice about the credit cards.

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