Payday Loans in Utah: Subprime Report
Utah is the nation’s fastest growing state with a population growth of 287,329 since 2010.1 Following Utah was Nevada, Idaho, Florida and Washington for the largest percentage increases in population.1 In fact, Utah’s poverty rate in 2015 was 11.3%, which is the 12th lowest in the nation.2 This is statistically the same as 2014, but a decrease from 13.2% in 2010 at the height of the recession.2 The median household income even rose from $60,976 to $62,912 in 2015, which is higher than the national median household income of $55,775.2
With a 2017 unemployment rate of 3.1% (below the nation’s rate of 4.7%), Utah continues to move in the right direction.3 So where does the need for bad credit loans, such as payday loans and title loans come into play? This might be in part to the higher than average cost of living in Utah. To make ends meet, Utah residents may find themselves trapped in an endless cycle of debt caused by title loans and payday loans—options residents should avoid.
Analyzing Payday Loans in Utah
In 2009, Utah had four times as many payday loan stores (427) as McDonald’s restaurants (89)—that accounts for about 19.12 stores per 100,000 people. That’s the 9th highest number of payday loan stores per capita in the nation. Utah lags behind Missouri (22.47 payday loan stores per 100,000 residents), South Carolina (22.48/100,000), Tennessee (23.62/100,000), Alabama (26.47/100,000), Mississippi (38.67/100,000), South Dakota (40.01/100,000) and New Mexico (41.78/100,000).5
With 427 payday loan stores in Utah, an average of 3,541 loans are taken out per location according to research by California State University Northridge.6 And, with no regulation on the maximum loan amount, residents are often taking far more out than they can afford to pay off in such a short time frame.7
About 12 million people take out payday loans nationwide, with 45,000 in a single year in Utah.6
According to the Center for Responsible Lending, the average payday loan amount in Utah was $346 as of 2013, which might not seem like a lot.6 However, if you add on an APR that has no cap, you can expect to be paying back a considerable amount more than the initial loan amount.
The History of Payday Loans in Utah
In 2014, Utah lawmakers tried to rein in the state’s payday lending industry with bill H.B. 46 “Deferred Deposit Lending and Forum Requirements” and H.B. 47 “Deferred Deposit Loan Amendments” to cap how many loans a person can carry at once.8
With two new bills, they also looked to create a public database to track each lender’s activities to further protect consumers.8
The new bills aimed to restrict anyone from having more than two payday loans outstanding at a time.8 It also capped the number of loans a borrower could withdraw at ten per year and the volume of loan principal at no more than 25 percent of the borrower’s monthly income at any given time.8 Both bills failed.
While the Utah lawmakers were unable to succeed in changing the predatory landscape, they haven’t stopped fighting. In 2016, the Senate voted again for tighter regulations for high-interest payday loans in Utah.9 Senators voted 22-1 to pass H.B. 292 Deferred Deposit Lending Amendments and sent it to Governor Gary Herbert who signed the bill.9
The bill required lenders to:9
- Check a borrower’s ability to repay
- Report loans to a database
- Offer (in writing) an interest-free loan extension of 60-90 days before suing for nonpayment
- Report how many lawsuits they file annually against borrower for nonpayment
These moves were made after The Salt Lake Tribune reported payday lenders sued 7,927 Utah residents in 2015. State reports also said nearly 46,000 residents could not pay off their loans in the 10 weeks they were extended.9
The total loan volume for payday loans in Utah was $142,121,576 for a single year with more than 45,000 people taking out a loan in 2014.6
Utah Payday Loan Rules and Regulations
Payday loans are codified in Utah under the Utah Code Ann. 7-23-101, the Check Cashing and Deferred Deposit Lending Registration Act.11 This law provides payday lenders must follow to provide payday loans to residents of Utah.
Payday loans in Utah charge an average of 459% annual interest, which is down from the previous year’s 482% average. However, this still approaches double the interest academic studies say the New York Mafia charged for loans in the 1960s.10
- Maximum Loan Amount:No regulation of maximum loan amount
- Loan Term:The deferred deposit loan may not be rolled over beyond 10 weeks after the day on which the deposit loan is executed.
- Rollovers Permitted:None specified, but cannot extend or renew a loan more than 10 weeks from original loan date.
- Finance Charge on a 14-Day $100 Loan:No Limit
- APR on a 14-day $100 Loan:459%12
In 2016, 43,564 payday loans were not paid off by the end of the 10 weeks—that’s one for each resident of Bountiful.10
Final Notes on Payday Loans in Utah
Payday loans in Utah far exceed the number of Subway, McDonald’s, Burger King and Wendy’s restaurants in the state combined—that’s something to worry about. While Utah lawmakers continue to fight for improvements in regulations for payday loans, lenders continue to fight back or find ways around regulations. The payday loan battle in Utah is far from over.
New annual data from the Utah Department of Financial Institutions states some payday lenders have charged interest as high as 1,408% in 2015—that’s $27 a week on a $100 loan.10
Analyzing Title Loans in Utah
What about title loans in Utah? While title loans might appear to be a better option, they, too, are far from an ideal solution for making ends meet. In Utah, there is no cap on the interest rate for title loans, which means your APR can be as high as 500% or more—it all depends on the lender.13
Utah laws for title loans are among the friendliest in the nation, resulting in title lenders charging an average of 300% interest.14 In fact, Utah is among just seven states that have no caps on their interest rates and fees, which can cost a lot of money for consumers, or their vehicle.14 In 2013, 56,977 title loans were taken out in Utah for a total loan volume of $59,370,034.14
The History of Title Loans in Utah
There are currently 251 car title lenders in Utah, which amounts to 7,541 people per licensee—that’s a lot of people for one store (and a lot of money).16 In 2003, Utah legislature passed House Bill 189, which amended the Financial Institutions Act, by creating Chapter 24 entitled the “Title Lending Registration Act [PDF]”.17
This statute was created to regulate title lenders in Utah by requiring lenders to register with the Utah Department of Financial Institutions.17 Title lenders in Utah were also required to post the interest or fees charged in connection to a loan consistent with the Truth in Lending Act (Reg Z) and provide a written contract detailing the terms of the loan.17
Utah title loan fees totaled $133.58 million while payday loan fees totaled $7.88 million.15
251 Utah Title Loan Stores14
7,541 People per Texas Title Lender14
251 California Title Loan Stores14
99,498 People per California Title Lender14
Utah Title Loan Restrictions
Utah is known for being lax on car title loans, which means there aren’t many limitations. While car title lenders in Utah need to register with the National Mortgage Licensing System (NMLS) and pay a fee of $400, there are no strict guidelines on interest and fees.18
One of the few restrictions on title loans under Utah law other than licensing is that the consumer can only borrow up to the fair market value of their vehicle. Furthermore, lenders must ensure borrowers can repay the loan, and only one loan is allowed per car title.18
Final Notes on Title Loans in Utah
Utah doesn’t seem to be changing the way they regulate title loans anytime soon. While loan amounts are limited to the value of the car, there is no cap on interest rates a lender may charge. Before taking the dive into title loans in Utah, look for other options.
Regulating Payday and Title Loans in Utah
Use payday and title loans in Utah with extreme caution. By educating yourself, you can take necessary steps in avoiding the predatory ways of payday and title loans in Utah.
Even if you don’t have protection of interest rate limits, the law still requires lenders to deal with you fairly and honestly. This means lenders must fully inform you about the interest you will pay. However, if you have already fallen prey to title and payday lenders in Utah, there are options available to help.
How to Report a Predatory Lender in Utah
Many lenders are registered to do business in Utah, and have voluntarily adopted a set of principles entitled, “Best Practices”. These principles were created to be consumer friendly. Residents of Utah are encouraged to ask lenders whether it has adopted these “Best Practices”.
If a company has adopted these principles, they have demonstrated their commitment to quality consumer relations. However, if a lender has not adopted these principles, it is important to not do business with them—they have not demonstrated their commitment to helping consumers.
You can contact the Department of Financial Institutions by calling (801) 538-8830 or the Utah Consumer Lending Association at (801) 328-1888 to learn more about these principles or to file a complaint. Remember to protect yourself and ask questions before committing to a payday or title loan in Utah.
- Address:324 South State Street, Suite 201 Salt Lake City, UT 84111
- Phone:(801) 538-8830
- Fax:(801) 538-8894
Outside Help for Payday and Title Loans in Utah
In addition to the Utah Department of Financial Institutions, you can also reach out to the >Coalition of Religious Communities (CORC) for further help. The CORC brings together people from 15 different faith communities to educate, organize and build community.
Together they work to draw attention to specific poverty issues and give people of faith the opportunity to express support for their low-income neighbors, and that means those affected by predatory lenders in Utah. Take a stand and contact CORC to see what they can do to help raise further awareness, and protect low income residents from further debt.
Consumer Protection in Utah
Utah lawmakers continue to reach out and find ways to help protect residents from predatory lenders. While the battle is ongoing, it is worth fighting. The payday loan and title loan industry in Utah isn’t disappearing anytime soon, which means you need to take a stand. Reach out to the Utah Department of Financial Institutions and other organizations to share your concerns—let your lawmakers know you want stricter regulations and rules.
Reference this page when you need more information on title loans and payday loans in Utah to protect yourself from predatory lending.
Guides to Payday and Title Loans in Utah Cities
You know payday and title loans in Utah are a problem. But what about at the city level?
Check out these payday and title loan guides for the following cities in Utah…
- “Utah is Nation’s Fastest Growing State” United States Census Bureau. Accessed March 25, 2017. https://www.census.gov/newsroom/press-releases/2016/cb16-214.html
- “New Census Data: Utahns’ income up, poverty down” The Salt Lake tribune. Accessed March 25, 2017. http://www.sltrib.com/news/4353954-155/new-census-data-utahns-income-up
- “Utah’s Employment and Unemployment Tables” Department of Workforce Services. Accessed March 25, 2017. https://jobs.utah.gov/wi/pubs/une/
- “State Debt” Balltopedia. Accessed February 22, 2017. https://ballotpedia.org/State_debt
- “McDonald’s vs. Payday Lenders” California State University Northridge. Accessed March 6, 2017. http://www.csun.edu/~sg4002/research/mcdonalds_by_state.htm
- “Payday Lending Abuses and Predatory Practices” Center for Responsible Lending. Accessed March 22, 2017. http://www.responsiblelending.org/state-of-lending/reports/10-Payday-Loans.pdf
- “In Our Opinion: Utah Payday Loans Lead Many to Debt Trap” Deseret News. Accessed March 22, 2017. http://www.deseretnews.com/article/865639034/Utah-payday-loans-lead-many-to-debt-trap.html
- “Utah Prepares to Crack Down on Payday Lenders” Think Progress. Accessed March 27, 2017. https://thinkprogress.org/utah-prepares-to-crack-down-on-payday-lenders-8c39fa66245d#.qmwansner
- “New Payday Loan Regulations Receive Final OK” The Salt Lake Tribune. Accessed March 27, 2017. http://archive.sltrib.com/article.php?id=3640906&itype=CMSID
- “Utah payday lenders’ average interest rate roughly double that of 1960s Mafia loans” The Salt Lake Tribune. Accessed March 27, 2017. http://www.sltrib.com/news/4785118-155/taking-out-a-payday-loan-in
- “Payday Lending State Statutes” National Conference of State Legislatures. Accessed 6, 2017. http://www.ncsl.org/research/financial-services-and-commerce/payday-lending-state-statutes.aspx
- “State Payday Loan Regulation and Usage Rates” The PEW Charitable Trusts. Accessed March 22, 2017. http://www.pewtrusts.org/en/multimedia/data-visualizations/2014/state-payday-loan-regulation-and-usage-rates
- “Car Title Loan Regulation” Consumer Federation of America. Accessed March 22, 2017. http://www.consumerfed.org/pdfs/Resources%20CTL%20StateLawTermChart5%2012%2016.pdf
- “Car-Title Lending” Center for Responsible Lending. Accessed February 13, 2017.
- “Payday and Car Title Lenders Drain $8 Billion in Fees Every Year” Center for Responsible Lending. Accessed February 15, 2017. http://responsiblelending.org/sites/default/files/nodes/files/research-publication/crl_statebystate_fee_drain_may2016_0.pdf
- “Driven to Disaster: Car-Title Lending and Its Impact on Consumers” CFA. Accessed February 23, 2017. http://www.responsiblelending.org/other-consumer-loans/car-title-loans/research-analysis/CRL-Car-Title-Report-FINAL.pdf
- “Title Lenders” Utah Department of Financial Institutions. Accessed March 27, 2017. https://dfi.utah.gov/money-services/title-lenders/
- “Utah lax on car title loans” Deseret News. Accessed March 27, 2017. http://www.deseretnews.com/article/635162637/Utah-lax-on-car-title-loans.html