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Experts, Consumer Advocates, and Borrowers Release New Fact Sheet on Impact of Unregulated Payday Loans on Indiana Families
Indianapolis, IN. – National and in-state advocates released a new fact sheet today about the impact of payday lending on Indiana’s residents. Representatives from U.S. Public Interest Research Group (PIRG), Indiana Catholic Conference, and Indiana Institute for Working Families (IIWF), a co-lead for the Indiana Assets & Opportunity Network, participated in a joint press conference call.
“The payday lending business is predatory by design. In Indiana, a payday loan payment consumes 36 percent of the typical borrower’s biweekly paycheck, leaving them unable to cover basic necessities like food and rent. The seemingly quick-fix solutions become costly traps, forcing Hoosiers to borrow again just to make ends meet. This cycle is built to ensure payday lenders have reliable revenue and repeat customers while sinking those with already limited resources further and further in debt,” stated Jessica Fraser, program manager at IIWF, a co-lead for the Indiana Assets & Opportunity Network.
The fact sheet shows that payday loans are among the most predatory forms of credit on the market. Although they are often marketed as having “reasonable” fees or charges, typical interest rates exceed 300 percent. The success of the payday lending industry is built on borrowers’ inability to repay – and the industry preys on people with low incomes and communities of color. Payday lending practices that create a debt trap take a considerable toll on the lives of Indiana’s residents and the economy of the state as a whole. Key findings include:
- The average Indiana payday borrower pays more in finance charges and fees than the cost of the original loan. For example, a typical payday borrower will pay more than $400 in finance charges for a $317 loan.
- Payday lending resulted in a net loss of over $16 million in economic activity for the state.
- State Sen. Travis Holdman and State Rep. Woody Burton who recently sponsored a bill that would have more than doubled the limit for what current Indiana law defines as criminal loan sharking.
For more information about predatory payday lending, visit StopTheDebtTrap.org
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