Payday Lenders: 7 Facts & Stats
- A payday loan is a high-cost, short-term loan based on a borrower's income.
- A "payday" loan is meant to be repaid with the borrower's next paycheck.
- The rates charged on payday loans can be up to 35 times those charged on credit card loans and 80 times the rates charged on home mortgages and auto loans.
A payday loan is a high-cost, short-term loan based on a borrower's income.
1) A "payday" loan is meant to be repaid with the borrower's next paycheck.
2) An average payday loan claims a third of a borrower's next paycheck.
3) The average loan size is between $300 to $500.
4) Borrower's typically end up paying $800 for a $300 loan. (Remember, these are extreme high-interest loans.)
5) Although payday loans are meant to be paid back with the borrower's next paycheck, most borrowers will owe payday lenders for five months out of the year.
6) The rates charged on payday loans can be up to 35 times those charged on credit card loans and 80 times the rates charged on home mortgages and auto loans.
7) Payday lenders are found more frequently in lower-income areas - giving them a reputation for being a predatory financial alternative to those who are already financially struggling.