1. Payday Lending in Louisiana
Trapping Working Families in a Cycle of Debt
Tim Mathis, Louisiana Budget Project
timmathis@lano.org
225.929.5266 ex. 225
www.labudget.org
2. Between $50 to $350
Borrowers write a check for the amount of
the loan plus “finance charges” and fees.
Typically last two weeks
No credit checks or collateral
520% annual percentage rate for $100 loan
3. At least 20,600 payday loan currently open
across the United States
945 active licensed lenders in Louisiana
1 payday lender for every 4,800 people
Over 4.1 million transactions made in 2008
3
5. Number of Average Number of
Total Payday Loan Total Loan Predatory
Year Payday Loan Transactions
Transactions Volume Fees Paid Payday Costs
Stores Amount Per Store
CRL 4.9 $1.6 $346 $311
3,657
Estimate 2005 1,351 $325
million billion million million
LBP 4.1 $1.3 $287 $258
3,871
Estimate 2008 1,059 $325
million billion million million
5
6. Long-term
indebtedness
Becoming a chronic
borrower
Loss of bank account
Bankruptcy
6
7.
8.
9. Earn $15,000 to $40,000 annually
Young, have at least a high school education,
have children, more likely to be divorced or
separated
Disproportionately African-American or
Hispanic
Poor credit history
Used for emergencies (35.9 percent) and
basic living expenses including food, gas,
medicine, utilities, or rent (21 percent)
9
10. Percent of Customers and Loan Frequency in One Year
25%
20%
15%
10%
5%
0%
1 to 2 3 to 4 5 to 6 7 to 8 9 to 13 14 or more
10
11. 140
120
100
80
60
40
20
0
New Orleans Baton Rouge Shreveport Lafayette Lake Charles Monroe Alexandria
Payday Lenders Mainstream Banks
11
13. Seventeen states
and the District of
Columbia effectively
ban triple-digit
interest rates
Eleven other states
use online
databases on all
payday loan
transactions
Over 5.0 Shops per 10K HH
2.0 to 4.9 Shops per 10K HH
0.1 to 1.9 Shops per 10K HH
No Payday Shops 13
14. Louisiana Deferred Presentment and Small
Loan Act
Maximum loans of $350
Fees no greater than 16.75%, up to $45
Documentation fee of $10
If a customer defaults, lenders may charge
36% interest for one year and 18 percent
thereafter, or a one time delinquency fee
Prohibits rollovers, but allows refinances
No limit on number of loans
14
15. 1. Cap finance charges for payday lenders at
the equivalent of 36% APR
2. Limit loans to those already indebted to any
payday lender for more than three months
in the past year
3. Improve tracking and reporting through a
database system
15
16. Provides independent, nonpartisan research
and analysis of Louisiana fiscal issues and
their impact on low income Louisiana families
Visit www.labudget.org
