Borrowers Use Payday Loans for Ordinary Expenses Not Financial Emergencies, says study
Pew researchers have found that most borrowers who take out payday loans use them to cover ordinary living expenses, not unexpected emergencies—a finding that contradicts industry advertising that emphasizes payday loans as short-term options to cover financial emergencies.
According to a new report "Who Borrows, Where They Borrow and Why,’’ the average borrower takes out a payday loan of $375 and renews it eight times before paying it off, spending about $520 on interest. Sixty-nine percent of survey respondents said the first time they took out a payday loan, it was to pay a recurring expense, such as rent, utilities, credit card bills, mortgage payments or food. Just 16 percent said they paid for a car repair or emergency medical expense.
Read the full article at stlbeacon.org.
- Safe Small-Dollar Loans Research Project