Oklahoma is No. 1 in Payday Loan Usage
Nationwide, 5.5 percent of adults have used a payday loan in the last five years, according to a new study by the Pew Charitable Trusts.
But the rate among Oklahomans is more than twice that, 13 percent — the highest in the United States.
These short-term loans — which are secured against a borrower’s next paycheck — typically come with exorbitant interest rates and fees. Proponents say they’re used by borrowers who can’t get ordinary loans. Critics claim payday loans are predatory.
From the report, Who Borrows, Where They Borrow, and Why:
Pew’s analysis of data from Oklahoma finds that more borrowers use at least 17 loans in a year than use just one.
Payday loan usage is higher in urban areas than it was in suburban areas, and is higher in the Midwest and South Census regions, Pew researchers observed. A “major factor” in the variations: differences “in how states regulate payday loans.”
About 75 percent of payday loan borrowers used storefront lenders, Pew researchers found. Oklahoma has about 400 of these storefront lenders, according to an analysis by 24/7 Wall St.
Oklahoma is among the 28 states with “permissive” policies when it comes to small-dollar credit. Such permissive states allow single-repayment loans with Annual Percent Rates of 391 percent or higher, Pew researchers found.
Among Oklahoma and its neighbors, only Colorado and Arkansas have more restrictive payday loan policies than the Sooner State, according to Pew’s ranking.
Colorado is considered one of eight “hybrid states,” which allow payday loan storefronts — where about 75 percent borrowers get such loans — but have “more exacting requirements, such as lower limits on fees or loan usage, or longer repayment periods.” Arkansas is one of 15 “restrictive states” that disallow all payday loan storefronts.
So, who’s taking out payday loans? Most are white women from 25 to 44 years old, Pew reports:
However, after controlling for other characteristics, there are five groups that have higher odds of having used a payday loan: those without a four-year college degree; home renters; African Americans; those earning below $40,000 annually; and those who are separated or divorced.
And why do borrowers need payday loans?
Most borrowers use payday loans to cover ordinary living expenses over the course of months, not unexpected emergencies over the course of weeks