Demographics Report 2010
Data regarding the payday lending industry is, at times, seemingly lacking. The industry is also constantly under fire from legislators and consumer advocate groups, and it’s hard to get a balanced, nuanced, fact-based reckoning of just what the payday loan industry is all about. Personal Money Network has compiled lending statistics from various lenders as well as academic research to present the following report, which aims to shed some light on the industry as a whole, as well as historical and market contexts for the product offered by the alternative financial services industry.
More data and research comes out every day, and Personal Money Network compiled as much of it as was available, to inform every and any interested party that wants to educate themselves.
Payday Lending Statistics Topics Covered
- Demographics of borrowers
The typical payday loan borrower is not who one might think. While often portrayed as being working poor, the average payday loan borrower has an annual income of $47,620 and is likely a homeowner.
- Cost of short term credit
Payday loan fees are often described as annualized percentage rates or APR – the same standard as car loans, credit cards and mortgages that take years to pay off. Most payday loans are repaid within two weeks, but other things – such as an overdraft fee – can carry drastically higher interest rates when expressed as APR.
- Lending practices
Many are led to believe that payday loan lenders are loan sharks with a license that are preying on the poor who don’t understand the product well enough. However, the poor are not the payday lenders’ typical customers, lenders typically make terms as understandable as possible, compared to the credit card industry – where only 20 percent of customers fully understand the cost of the service.
Personal Money Network has a financial stake in the payday loan lending industry, and fully discloses that fact. However, Personal Money Network is not a direct lender, and thus can lend a unique perspective, which will hopefully shed some light on the industry and trends within it.