Report Detailing Payday Lending's Financial Drain on Hoosiers Released by A&O, Indiana Institute for Working Families
In 2002, the Indiana General Assembly granted payday lenders an exemption to Indiana’s criminal loansharking statute, which sets a maximum annual percentage rate (APR) of 72 percent. Today, 262 payday loan storefronts make small loans with rates up to 391 percent APR in Indiana.
Eighty-six percent of payday storefronts are operated by out-of-state parent companies.
Storefront payday borrowers have a median annual income of $19,752 and borrow an average of eight to 10 loans per year.
Over the past five years, payday lenders have drained an estimated $322,049,432 in finance charges from these Hoosier borrowers.
Payday storefronts in Indiana are disproportionately located in lower-income neighborhoods and communities of color.
If this debt had been financed at 36% APR, these Hoosier borrowers and their communities could have benefited from an additional $291,307,803 over the past five years to spend in their local economies.
To read the full report, click here.