Posted in consumer protections, Financial

Predatory Payday Lenders – The vultures in our society

Payday lenders prey upon the most vulnerable in our society. With their messages of easy and quick money, they lure thousands further and further into debt.  It’s a vicious cycle once you succumb to the lure.  Many times, in order to pay one payday loan, the borrower has to take out a second payday loan.  Although many states have passed usury laws, the interest rates charged by payday lenders is astronomical.

NCLR Action Fund, in their blog today on Huffington Post, describes payday lenders as follows:

Payday lenders are pernicious institutions that are more prevalent than McDonald’s restaurants in the United States. They offer small but high-interest loans to families who need money quickly — the average payday loan borrower makes slightly over $22,400 annually. Nationally, annual interest on payday loans averages a massive 339 percent. While the loans may be for only a few hundred dollars, the profit on these transactions is astounding. As ThinkProgress reported in 2013, the typical pay-day loan borrower pays an average of $520 of interest on a loan of $375. These astronomical interest payments give the payday loan industry $46 billion in profits each year. It’s an infuriating fact that these massive revenues come from trapping striving low-income workers in a cycle of ever-increasing debt. transactions is astounding. As ThinkProgress reported in 2013, the typical pay-day loan borrower pays an average of $520 of interest on a loan of $375. These astronomical interest payments give the payday loan industry $46 billion in profits each year. It’s an infuriating fact that these massive revenues come from trapping striving low-income workers in a cycle of ever-increasing debt.

read more at CFPB Must Rein in Predatory Payday Lenders with Strong Regulations

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