Payday and Car-Title Lenders Drain Nearly $3 Billion in Fees Every Year
Special report from the Center for Responsible Lending, June 2023
The national Center for Responsible Lending (CRL) reports that single-payment and payday installment loans in 31 states drain more than $2.2 billion in fees per year from borrowers whose average incomes are approximately $25,000 a year.
Car-title loans drain more than $700 million annually from borrowers in 17 states.
Together these predatory loans drain almost $3 billion annually from those families who can least afford it.
These loans typically carry triple digit interest rates that average more than 300% Annual Interest Rate (APR). Research shows that they lead to a debt trap that is nearly impossible to escape. Past CRL research has shown that payday and car-title lenders' bottom lines depend on borrowers being stuck in a cycle of debt.
Other research has shown that the typical car-title loan is refinanced eight times. In states that report data on vehicle repossessions, the share of car-title loans that lead to repossession is alarming. In California, 33% of car-title loans result in repossession.
Kansas is ranked 18th in states in the high dollar amount of payday loan fees per year, $15,964,218 and car-title fees, $2,526,648.
