Blacks are Just Not Into Payday Loaning
Blacks are Just Not Into Payday Loaning
Pew Charitable Trusts say that those who borrow from payday loan stores are borrowing in order to pay for their ordinary living expenses and not borrowing for emergencies.
In the first series of the reports of Pew entitled “Who Borrows, Where They Borrow and Why,” it is stated that 81 percent of those who used payday loans to pay for costs could have avoided unnecessary expense if the short term loans with high interest rates were not an option.
There are alternatives for pay day loans that are more preferred by individuals: 44 percent say they prefer credit unions, 37 percent say they go for credit cards and 17 percent say they would much more rather get employer loans. There are 69 percent of first time borrowers that used payday loan for paying their liabilities like expenses for utility bills, credit cards and also for their rents and meals.
Most of the people who engage in payday borrowing are White females between the ages of 25 to 44 and African-Americans and four other brackets are also borrowing frequently. These people are usually renting a lot, earning less than $40,000 a year or those who are divorced or separated from their spouse.
Other findings of the survey include:
a) Payday loans in 2010 include twelve million Americans who apply in payday loan stores or online.
b) A payday borrower is usually in-debt for an average of about 5 months before they can pay off the whole debt.
c) A borrower usually gets eight loans and would spend about $520 for the interest that the loan covers.
The Center for Responsible Lending also had a research on payday loans and they have found out that the areas that have colored residents have clusters for payday loans. Also, the states that have the highest number of payday loan stores have about 10,000 residents that are African-American. These states are Alabama,Louisiana, Mississippi, Missouri, Nevada, South Carolina and Tennessee.