What Cities Have the Highest Concentrations of Payday Loan Stores?

Inside Subprime: Dec 11, 2018

By Aubrey Sitler

We all know that payday loans vary state to state, but which cities have the most physical payday loan stores?

The answer to this is not straightforward — in part because no one keeps a running list of all payday loan storefronts in every city or neighborhood across the country, and in part because a lot of the data that have been reported rely on different sources that may or may not match up.

Not surprisingly, though, the data that exists tell us that there tend to be higher concentrations of payday lending stores in states with less restrictive laws and regulations governing bad credit loans and no credit check loans. What does that mean for you? The more willing your state is to let payday loan firms trap you with high fees and interest, the more likely it is that you’ll find a payday loan store on your block.

One analysis offers a look into the numbers and per capita densities of payday lenders by state — and it even compares those to the number of McDonald’s restaurants in each state. By these data, there are more payday lenders in California (2,451), Tennessee (1,344), and Mississippi (1,100) than any other state, and the highest concentrations of payday loan firms per 100,000 people can be found in New Mexico (41.78), South Dakota (40.01), and Mississippi (38.67). One drawback of this analysis, though, is its lack of reference to points in time in which these data were gathered, as well as any link to the sources and methodology that informed these calculations.

From a different angle, a Pew Charitable Trusts report notes that in the 28 states with few restrictions on payday lenders (which unsurprisingly includes all 5 states listed in the first analysis above), there are an average of 11.57 storefronts per 100,000 residents. By that math, for example, there would be an estimated 1,540 payday lenders in Los Angeles and 236 payday lenders in Columbus, Ohio, based on their 2016 estimated populations of 13,310,447 and 2,041,520, respectively. (Another finding in this report notes that restricting payday lending storefronts also has the impact of decreasing the total number of people who take out payday loans.)

However, it’s also important to remember that those estimates are averages across all 28 of the Pew-designated less restrictive states. Some cities may have way fewer payday loan storefronts per capita, and some may have many more.

Here’s an example of how that can play out, and how some places can have much different numbers than a mere estimate. According to another report, Tennessee is the state with the most payday lenders at over 1,200 storefronts across 89 counties. Shelby County, home of Memphis, has 232 predatory storefronts — the highest number of all Tennessee counties. Using the Pew average of 11.57 storefronts per 100,000 people, Shelby County’s 937,961 residents would be estimated to have about 108 payday loan stores. Instead, they have a whopping 24.8 storefronts per 100,000 people. Madison County, TN has an even higher concentration at 29.5 storefronts per 100,000 people for its much smaller and more rural population of 97,643.

While there may not be a simple answer to the question of where you will encounter the most payday loan stores, it seems safe to say that they crop up most in the states that fail to restrict predatory lending practices.

For more information on payday loans, scams, cash advances, and title loans, check out our state and city financial guides.