Payday Loans and Tax Time
This infographic provides a snapshot of the impact of payday loans on borrowers. Payments are unaffordable for the budgets of most payday loan borrowers, and 1 in 6 has used a tax refund to eliminate payday loan debt. Similar to payday borrowers, 1 in 5 auto title loan borrowers reports using a tax refund to repay a title loan.
Note: This infographic was updated on April 13, 2016, to include source information.
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Nick Bourke is director of consumer finance at Pew, which includes the small-dollar loans and consumer banking projects. These teams conduct research on payday and other small loans and study the accounts that Americans rely on every day to manage their finances, such as checking accounts, prepaid cards, and mobile payments. They also offer recommendations designed to protect consumers from... Read More
Nationwide, Americans in all demographic groups use payday loans. The only requirements to obtain such credit are a checking account and a source of income. Typical borrowers earn about $30,000 per year, and most use the loans to cover recurring expenses such as rent, mortgage payments, groceries, and utilities. Read More
Proposed regulations from the Consumer Financial Protection Bureau (CFPB) would protect consumers from conventional, lump-sum payday loans, which Pew’s research has shown usually have unaffordable payments that trigger reborrowing. The pending rule strongly encourages payday and auto title lenders to give borrowers more time to repay loans in smaller installments, rather than large lump-sum... Read More