PA Payday Lending: Short-Term Loans, Long-Term Issues
Wednesday, May 16, 2012
HARRISBURG, Pa. - The pluses and minuses of payday lending are playing out in Harrisburg.
The state House Consumer Affairs Committee has advanced legislation that would legalize what some call "predatory" payday lending. Supporters say allowing lenders to charge annual interest rates as high as 369 percent for a two-week loan will help create jobs. However, a new report from the Keystone Research Center shows otherwise, says labor economist Dr. Mark Price.
"Payday lending, when you have an expansion of it, it certainly creates some jobs on the side of the payday lending operation. But it also destroys other jobs in the economy, because consumers are paying these excessive fees, which end up crowding out other spending in the local community."
While payday loans are born from the desperation of people needing money between paychecks, Price says those who don't qualify for them are better off in the long term than those who do.
"There are consumers that payday lenders actually do turn down and are unwilling to make them a short-term, $300 loan. If they don't get a loan, they're less likely to file for bankruptcy than people that the lenders actually do choose to make a loan to."
Lender fees such as those being considered by state lawmakers are what can turn a relatively small loan into an insurmountable mountain of debt, Price says.
"They end up having to take out another loan, and another loan and another loan - and each time, they're racking up these enormous fees, putting those households in worse shape financially."
Payday lending hits rural sections of the state hardest, Price says, areas that often have limited economic opportunities for residents to repay their debts. He notes that a higher concentration of these lenders is typical in rural communities, which he calls "a perfect landscape" for them.
The report is online at keystoneresearch.org.
get more stories like this via email
WHITING, Ind. -- International oil-and-gas producer BP will pay more than $500,000 to the federal government as part of a legal settlement over air …
DENVER -- Women and low-income students disproportionately put their college careers on hold during the pandemic, according to a new report. Of the 1…
HARRISBURG, Pa. -- With kids stuck at home early in the pandemic, a new report said child-abuse cases decreased in 2020, but children's advocates say …
MINNEAPOLIS -- With forbearance protections ending during this stage of the pandemic, some struggling homeowners are sorting out their mortgage …
COLUMBUS, Ohio -- In a system plagued by a history of disparities, Ohio's child-welfare workers and children's advocates say it is time to reimagine …
PITTSBURGH -- Pennsylvanians were overwhelmingly present during three days of virtual public testimony to the Environmental Protection Agency (EPA) la…
FRANKFORT, Ky. -- Kentucky lawmakers heard from the state's nurses, firefighters, truck drivers, grocery store employees and other essential workers …
PORTLAND, Maine -- About 2,200 children are in foster care in Maine, and agencies say there are not enough families who are actively able to accept …