CFPB Releases Report on Payday Lending

Explore:  CFPB Payday Loans

The CFPB’s Office of Research released a report, CFPB Data Point: Payday Lending, analyzing consumer use of payday loans. The Office of Research obtained data from storefront payday lenders through the supervisory process. This was the same data used by the CFPB in its report issued on its initial findings on payday loans and deposit advance products (see April 30, 2013 Alert). The report explains the CFPB’s findings with respect to loan sequence durations, loan sizes and amortization and loan usage. According to the report, over 80% of the payday loans surveyed were rolled over or renewed within 14 days. The report also found that 15% of new payday loans were followed by a loan sequence at least 10 loans long and that 50% of all loans are in a sequence at least 10 loans long. The report notes that less than 20% of borrowers surveyed had reductions in principal amounts of their loans between the first and last loan of a sequence. Moreover, monthly borrowers were found to be more likely to stay in debt for 11 months or longer. Finally, most borrowing involved multiple renewals of the initial payday loan, as opposed to having “multiple distinct borrowing episodes.”

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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