Payday lending continued its rapid growth in Colorado last year, jumping 28 percent to $632 million. Payday loans — short-term loans at high interest rates — first topped the $500 million mark in 2005, when they grew 34 percent. The industry was as small as $36 million in loans in 1996. . . . An August study sponsored by the American Bankers Association found that 80 percent of consumers had not paid an overdraft fee in the prior 12 months. Of the 20 percent who had, about one-third paid just one overdraft fee. Colorado law says payday loans can be as much as $500 for up to 40 days, with the balance due on the consumer's next payday. The maximum finance charge allowed for a $500 loan is $75.
From here.
Payday lenders made over $632 million dollars in payday loans to almost 290,000 Colorado consumers.
This represents a 28 percent increase in loan volume from 2005 and a 117 percent increase from 2003.
The average payday loan amount was $351, to be repaid in 18.5 days, with an average APR of 329 percent. . . . Although 14.2 percent of payday loans defaulted, only 4.2 percent of payday loans were not recoverable through collection activities.
Nearly one-in-six borrowers were in debt for at least 6 months of the year, with 13 or more payday loans from the same lender.
From here (emphasis added).
There are about 4.6 million in Colorado. About 290,000 of them took out 1.8 million payday loans, an average of six apiece. The finance charge paid by an average payday borrower is roughly $350 (i.e. 100% of the amount borrowed) and is for an average period of about 3 months. There are 661 payday loan licenses in the state.
1 comment:
This is a very serious problem because once in the loop you can almost never get out. Other states have solved the problem of usurary rates by limiting to 25%APR same as any other lending institution. The other states, Illinois as an example, included the limits on the check scheme with a package that forces day labor companies to comply with all reporting standards as other companies that hire people. And, payment in check form that was payable anywhere, not the local check place such as payday loans.
With the proliferation of these outfits into suburban neighborhoods there is more attention being paid to how insiduous they are.
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