Together Baton Rouge

A presentation on Payday Lending in Louisiana. Provided at the Together Louisiana Statewide Issues Conference on February fifteenth, 2014.

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1. 1. Payday Lending in Louisiana Statewide Issues Conference 15th, 2014 february
2. 2. whom? HOW? WHAT?
3. 3. Whom Runs On The Pay loan day?
4. 4. Families with young ones making $15,000 — $40,000 per year Disproportionately AfricanAmerican or Latino bad Credit History want cash that is extra emergencies and basic cost of living Social Security Recipients
5. 5. Exactly just exactly How many individuals simply take down payday loan in Louisiana?
6. 6. Payday really really loves Louisiana 23percent of Louisiana households depend on predatory financing 6th greatest within the country US typical: 18% About 57,000 Louisiana households sign up for loans that are payday year supply: Louisiana Budget venture
7. 7. Payday Business Design
8. 8. Payday company Model Billions & billions served # of McDonalds # of Payday stores 12,800 20,600 230 936
9. 9. Payday enterprize model = repeat that is multiple additionally the financial obligation trap. Many 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 enterprize model = repeat that is multiple therefore the financial obligation trap. Most revenue that is payday from “more loans per customer”
11. 11. Payday enterprize model = repeat that is multiple and also the financial obligation trap. Into the their very own terms … “in just about any big, mature cash advance profile, loans to duplicate borrowers generally constitute between 70 and 90 % associated with profile, as well as for some loan providers, much more.” – Community Financial Services of America (leading industry trade association that is payday
12. 12. Payday enterprize model = numerous repeat loans in addition to financial obligation trap. Within the their very own terms … “The concept in the commercial is you have got to get that customer in, strive to turn him right into a customer that is repetitive long-lasting consumer, for the reason that it’s where in fact the profitability is.” – Dan Freeman, CEO of money America
13. 13. Debt Cycle
14. 14. Interest Rates apr (APR) Average 30-year mortgage scholar Loan Auto 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. So how exactly does this work? ? ? ? ? ?
16. 16. just 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 periods 1 12 months = 436% APR Plus charges of ten dollars PER LOAN brings APR to 696%!
17. 17. Supply: Louisiana Budget Venture
18. 18. Individuals who take out a quick payday loan are as prone to seek bankruptcy relief as individuals REFUSED for cash advance of men and women in BR who seek bankruptcy relief do this, to some extent, as a result of pay day loans borrowers that are payday since expected to have filed for bankruptcy in last five 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 figures) $196,394,987 supply: Insight Center for Economic developing, “The Net Economic Impact of Payday Lending into the U.S.”, 2013
20. 20. Payday hurts our economy Net jobs lost ANNUALLY as a result of economic impact of payday lending 671 jobs lost (each year) Source: Insight Center for Economic developing, “The Net Economic Impact of Payday Lending within the U.S.”, 2013
21. 21. Where are cash advance stores in my own town?
22. 22. Alexandria # of payday loan providers 29 Source: Louisiana Budget venture
23. 23. Shreveport / Bossier City # of payday loan providers 78 Source: 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 lenders 85 (State Capitol of Payday) Source: Louisiana Budget venture
29. 29. Exactly 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 legislation (“Louisiana Deferred Presentment and Small Loan Act”) • Legislature passed a legislation this season INCREASED that is allowing FEES pay https://personalbadcreditloans.net/reviews/loan-solo-review/ day loans. (that 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 records had been involuntarily closed as a result of repeated overdrafts by 11-16 % ARIZONA this year, passed a cap of 36% APR, which particularly pertains to pay day loans.
31. 31. What exactly are other states doing? ARKANSAS State Supreme Court ruled that Payday Lending violates state usury laws and regulations – last lending that is payday left their state during 2009. VERMONT Regulated payday loan providers in 2006 through legislative action. – Families conserved nearly $100 million/year – Former borrowers reported an effect that is“positive on the individual funds
32. 32. Exactly what are other states doing? TEXAS Taking a city-by-city approach Dallas that is, San Antonio, and El Paso manage where payday lenders operate, exactly just how they issue loans and what they charge in interest and fees. WASHINGTON STATE – Capped the final number of payday loans which can be lent to your person from any business at 8 each year. – Number of yearly pay day loan transactions dropped from 3.2 million to 856,000.
33. 33. “Military Lending Act” (2007) Prohibits payday loan providers from charging you APR’s above 36 per cent to active armed forces workers and their dependents. – The Pentagon unearthed that army personnel collectively paid over $80 million of the salaries toward charges each year. – Department of Defense: “Predatory lending undermines army readiness, harms the morale of troops and their loved ones, and increases the price of fielding an all volunteer fighting force.”
34. 34. You can find options to Payday! Examples: Louisiana Federal Credit Union provides affordable, short-term loan product: – $300 loan, with max of 15% APR. ASI Credit Union provides “Stretch Loan” of between – $200 to $500 loan, with 12per cent APR. MORE MANY usage alternatives in states that control Payday Lending
35. 35. HOME MEETINGS Share tale about how exactly financial obligation has impacted you or somebody you understand?