CALIFORNIA FINANCIAL SERVICE PROVIDERS ASSOCIATION

Payday Loan Choices and Consequences

Vanderbilt University Law School, Law and Economics, Working Paper Number 12-30 High-cost consumer credit has proliferated in the past two decades, raising regulatory scrutiny. We match administrative data from a payday lender with nationally representative credit bureau files to examine the choices of payday loan applicants and assess whether payday loans help or harm borrowers. We find consumers apply for payday loans when they have limited access to mainstream credit. In addition, the weakness of payday applicants' credit histories is severe and longstanding. Finally, based on regression discontinuity estimates, we show long-run effect of payday borrowing on credit scores and other measures of financial well-being is a precise zero.

Bashing Payday Lenders: Obama targets another industry that serves low-income Americans

One irony of the Pelosi Congress's rush to punish banks and other financial institutions is that it has raised the price of credit for everyone, especially the poor. Now Democrats may hurt those same low-income earners again by limiting one of their few remaining sources of credit: payday lending...

Why Payday Loans Are So Expensive

It’s one of those things that gets asked all the time. Just why are payday loans so expensive? The APR rates on them are 300, 400%, surely someone must be making an absolute fortune out of them? You know, ghastly people profiteering from the misery of the poor? It’s not, actually, quite that simple. The thing is, lending small amounts of money for short periods of time is simply going to be expensive. You do have to have a place where the work is done, an office or a shopfront....