Which state has the most payday lenders? A new study has the answer
Inside Subprime: May 11, 2018
By Andrew Tavin
There are more payday lenders in America than there are McDonald’s locations. But only one state can have the most predatory lenders. So who gets the (dis)honor? Is it Texas, where everything is bigger? In Alaska, where there’s the most room? Maybe they somehow managed to pack a whole bunch of lovely tropical locations onto the Hawaiian islands?
Actually, it’s Tennessee! According to a study by the non-profit Metro Ideas Project, Tennessee has 1,200 predatory payday lender and check-cashing establishments. Shelby County, home of Memphis, was the county with the most lenders, topping out at 232 locations. The highest concentration of predatory lenders was in Madison County, where the report found 29.53 locations per 100,000 people.
Payday lenders and check-cashing establishments tend to charge exorbitant fees and carry huge annual percentage ratings (APRs), for their services. The individuals they loan to tend to be less white, less college-educated, much less wealthy, far less likely to own their living spaces, and with a bad credit score—if they have one at all.
These sorts of consumers likely won’t be able to get loans from a proper bank with good terms if they need them, and that’s assuming there are even banks in their neighborhoods. Should they run into an emergency, whether it be medical, automobile-related, getting behind on rent, or whatever else, predatory lenders can take advantage of them. As such, a large concentration of predatory lenders could correlate with other economic issues the population of a state could be facing.
And those who use payday lenders are often repeat users. The report cites a statistic from the Consumer Financial Protection Bureau that found “80 percent of payday loans are taken out within two weeks of repayment of a previous payday loan.” This can lead to the dreaded cycle of debt, which we’ve covered before.
To learn more about payday lending in the U.S., check out these related pages and articles from OppLoans: