7 Findings From the ICCED’s Report on Payday Loans
A few weeks ago, we discussed a Consumer Financial Protection Bureau (CFPB) report on payday loans. The CFPB found that 48 percent of borrowers took out more than ten payday loans in a year. Adding to it is a report from the Insight Center for Community Economic Development (ICCED), which was published in March. The ICCED was more concerned about the overall economic impact of payday loans rather than borrower characteristics. Still, those considering filing Las Vegas bankruptcy because of excessive debt from payday loans or other debts might benefit from the ICCED’s report’s insights.
(1) The good news, state and local governments are trying to limit payday loans because they negatively affect communities economically. Payday loans’ interest rates can have an annual percentage rate of 300 percent or more.
(2) In 2011, the United States lost $774 million to payday lending, costing 14,000 jobs nationwide. Payday lenders themselves made $3.3 billion.
(3) The $774 million loss is not to payday lenders specifically but to the lost opportunity for consumers to spend their money on other purchases. Every dollar of interest paid to payday lenders cost the economy $1.94 but only increased spending by $1.70, leaving a net loss of $0.24. This excludes the “direct impact” of the borrower paying the payday lender the interest.
(4) The payday lending industry’s reports omit the costs of the loans to the economy, so the ICCED’s report discredits them.
(5) Because payday lending can throw people into bankruptcy, the ICCED measured a loss of an additional $169 million in chapter 13 plan payments.
(6) The ICCED also measured the sectors of the economy that suffered most from the losses caused by payday lending. Most of them were health care related, such as dentists’ offices and hospitals, which amounted to tens of millions of dollars.
(7) In 2007, Nevada lost $112 million in interest payments to payday lenders, but in 2011 that figure dropped to $54 million.
You can find the ICCED’s report here. Payday lending often drives people to bankruptcy, so if your finances are in trouble, then talk to an experienced Las Vegas bankruptcy lawyer before visiting a payday lender.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Freedom Law Firm Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-803-9251 to set up your free consultation.