Nationally, 5.5% of adults have used a payday loan in the past five years, according to a new study from Pew Charitable Trusts.
But the rate among Oklahomans is more than double, 13% – the highest in the United States.
These short-term loans – which are secured against a borrower’s next paycheck – usually come with outrageous interest rates and fees. Proponents say they are used by borrowers who cannot get regular loans. Critics claim that payday loans are predatory.
From the report, Who borrows, where does he borrow and why:
Pew’s analysis of Oklahoma data reveals that more borrowers use at least 17 loans per year than just one.
Payday loan usage is higher in urban areas than it was in suburban areas, and is higher in census regions in the Midwest and South, the Pew researchers observed. One “major factor” in the variations: differences “in the way states regulate payday loans.”
About 75 percent of payday loan borrowers used in-store lenders, Pew researchers found. Oklahoma has about 400 of these storefront lenders, according to an analysis by 24/7 Wall Street.
Oklahoma is one of 28 states with “soft” lending policies. Such permissive states allow one-time loans with annual percentage rates of 391% or more, 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 showcases – where about 75% of borrowers get such loans – but have “more stringent requirements, such as lower limits on payday loans. fees or loan use, or longer repayment periods ”. Arkansas is one of 15 “restrictive states” that ban all showcases of payday loans.
So who takes out payday loans? Most are white women between the ages of 25 and 44, Pew reports:
However, after controlling for other characteristics, five groups have a higher probability of having used a payday loan: those without a four-year university degree; tenants of houses; African Americans; those who earn less than $ 40,000 per year; and those who are separated or divorced.
And why do borrowers need payday loans?
Most borrowers use payday loans to cover their daily expenses over the months, and not unforeseen emergencies over the weeks.