Payday Loan Places

Payday Loan Places – There are more payday lenders in the US than McDonald’s or Starbucks, reflecting an economic climate where fast money is more important than fast food.

Payday lending, where users pay a fee for how much to advance their payments, has flourished over the past 20 years. Now there are more than 20,000 across the country, according to St. Louis Federal Reserve, while McDonald’s boasts 14 places, 267.

Payday Loan Places

They are used most often by people who cannot afford regular credit – often those at or near the bottom of the economic spectrum, with nearly a quarter living on government assistance or pension income.

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While the loan may satisfy a need for quick cash, it can be a lifeline for end users paying effective percentage rates, or APRs, of more than 300 percent.

As a result, they have drawn the attention of administrators, politicians and economists to why we should worry about those who are left behind in the restoration of the unequal economy.

“A large number of Americans are living paycheck to paycheck. They are one spending spree away from being in a financial crisis.”

“A large number of Americans are always paying their bills,” said Greg McBride, chief financial analyst at Bankrate.com. “It’s an unplanned expense away from being in a financial crisis.”

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McBride cited some startling statistics: Twenty-six percent of Americans have no emergency savings and 41 percent say their “first financial priority” is staying current with their expenses or being stuck in debt. This is happening even as financial headlines raise the stock market fresh every day and the administration of President Barack Obama praises the revival of the US economy.

“Americans who have assets have seen the value of those assets appreciate, but Americans who don’t have those assets, aren’t feeling any more in their pockets, especially in a time of stagnant incomes,” McBride said. “If you don’t have those things, and you haven’t seen a pay rise, then you’re not better off, you’re not rich.”

The mean, or typical, payday borrower makes $22,476 a year and pays $458 in fees. However, a quarter of those borrowers paid $781 or more in fees because of repeated use, according to the Consumer Finance Protection Bureau, which monitors the roughly $50 billion industry and is likely to prioritize regulation.

About 48 percent of borrowers made 10 transactions in the CFPB’s sample period, and 14 percent had more than 20 transactions. The average loan amount was $350, for 14 days. Average fees of $15 per $100, calculated at an APR of 322 percent.

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In total, consumers using payday loans were on the hook with their lenders for 199 days, or about 55 percent of the year.

“It appears that these products may work for some customers who need to defer spending for a short period of time. The key to making the product work as designed, however, is sufficient cash flow that can be used to pay off the debt in the short term,” the CFPB wrote in a 2013 report studying the increase in the payment date.

“However, these products can be dangerous for consumers when used to create chronic financial deficits,” the report continued. “We find that a large share of payday loans and deposit advance users carry out transactions for a long time, indicating that they cannot fully repay the loan and pay other costs without taking out a new loan soon after.”

A year ago this month the bureau began accepting consumer complaints and received thousands soon after, according to the St. Louis Fed, which in its latest report described the ability to pay money “to be a financial burden for many consumers.”

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Bankrate’s McBride warned, however, that overregulation could be a problem if it ends up denying cash-strapped consumers who can’t get regular loans or credit cards access to emergency funds.

“That’s a double-edged sword,” he said. “In some ways it can help consumers but in some ways it can hurt consumers. Limits on how often that loan can roll over can keep consumers from falling into an endless pit of debt. But there is definitely a fine line. These services exist because the demand is so high. The fact is that most Americans want credit. short-term.”Thanks to the coronavirus pandemic, many retailers’ sales have dried up, doors have been closed, and workers have been laid off.

But across Illinois, a state law passed earlier this year has led hundreds of certain types of stores to close, including one in Evanston. And that’s exactly what many advocates and consumer advocates want to happen.

The companies in question offered payday loans and other short-term, high-interest loans that critics argued kept borrowers trapped in a perpetual cycle of debt. They can’t pay everything, these critics say, so consumers end up borrowing more.

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The term “payday loan” refers to the average length of the loan, about two weeks, the average payday for most borrowers. Payday loans require full payment on the due date, plus a loan fee. There are also short-term loans where the borrower’s car title is held as collateral and short-term loans, which allow for a longer repayment period than payday loans.

Loan amounts are usually a few hundred to a few thousand dollars, for customers who often have “poor” credit ratings, which makes it impossible for the bank to process transactions with them.

Kesha Warren, of South Holland Township, says she took out a $1,250 car loan to help keep her business afloat, but ended up owing not only the principal, but also $4,200 in interest and fees, according to of the video produced. is the Chicago Community Trust, an organization that takes interest in such loans.

Charla Rios, a researcher at the national group, Center for Responsible Lending, says payday loans and other similar tools “do more harm than good.”

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Before Illinois passed the Predatory Lending Prevention Act, payday and other short-term loans could reach 404 percent each. The new law caps such rates at 36% APR, in line with similar laws in 17 other states and the District of Columbia.

Even 36% is more than twice as much as someone with bad credit can pay off a car loan, according to U.S.News & World Report, even though car loans tend to have higher loan amounts and longer repayment periods.

Besides affecting payday and car title loans, the Illinois interest cap law affects installment loans from online lenders.

A statewide association that represents online lenders says consumers are being harmed by the Illinois law, with fewer loan options available to those who may not qualify for a bank, savings and loan, or credit union.

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Andrew Duke, executive director of the Online Lenders Alliance, calls the law “a solution in search of a problem.”

The combined consumer agency, he says, saw only 1% of complaints from the public in 2020 related to personal loans.

Lenders also say that focusing on the annual percentage rate can be misleading, because while 300-400% is the annual rate and may sound very high, the actual amount paid for a small loan is lower when the loan is paid on time. For example, before the new Illinois law went into effect, the fee for a $100 loan was $15.50 for a two-week loan.

But supporters of the law say borrowers often default, the loan rolls over, and the consumer is buried in an ever-increasing amount of debt. Or, the customer pays off the loan on time, only to borrow again a few weeks later.

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Brent Adams, of the Illinois-based Woodstock Institute, a liberal policy think tank, says borrowers initially felt they would be able to repay say, $500 at a time.

But, he says, “research shows that the trap is more common than not,” because the borrower can’t make the due date, and has to extend the loan, “to buy more time with a new payment added to it. The average payday loan, Adams said, “money loan is too much”

Duke, a group of online lenders, says a short-term, low-dollar loan can be the best option for paying off delinquent bills, piling up credit card debt, or even filing for bankruptcy.

He says interest rates in Illinois will force many online lenders to stop doing business here, because it is impossible to make a profit.

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But critics say the high interest rates on such loans can cause similar problems, such as missing other payments or ending up in court.

According to the State of Illinois, more than half of short-term, high-interest borrowers made less than $30,000 per year, for the 2012-2019 period. The transaction value at the time was nearly $7 billion.

While Evanston has a large population of all races, it is primarily an affluent community with little appeal for brick and mortar payday loan stores, even before the new Illinois law.

AmeriCash Loans, 1801 Dempster St. closed a few months before the new state law went into effect. (Image from Google Maps

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