Cash advances are an issue batted around by many politicians. The number of payday loans taken out within the last four years within the UK has increased by over 400 percent. In states as diverse as Montana, Arizona, and Ohio, new legislation that limits payday lending has been passed. Cash advance interest would be capped at 36 percent or higher interest, if S. 3245 passes the US Senate.
Trying to understand payday lending statistics
It can be very difficult to comprehend the payday financing market as the data available can be inaccurate and conflicting. A recent report by Personal Money Store that compiles more than two dozen studies on the market reveals that many commonly held beliefs aren’t supported by the numbers. Most customers of short-term lending goods have worked at the same job for four years or more. Over 90 percent of customers who take out payday cash advances say they understand the charges they are paying. At the same time, only about one-fifth of credit card customers understand their charges, according to a record by creditcards.com.
The figures driving short term credit
There is a belief that all cash advance applications are approved — but studies have shown that up to 20 percent of applications are rejected. Still, one of each and every five pay day loans is written off as a default. The profit margin for most payday lenders is between 8 percent and 10 percent, compared to the 12 percent profit of J.P. Morgan and 27 percent profit Goldman Sachs reported to the Securities and Exchange Commission in April.
Educating the political discussion
It could be difficult to discover a debate about payday lending that has been informed by statistics. Because payday financing has become a political issue across the country and around the world, it is very significant to have complete, accurate, and reliable statistics about the industry.
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