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fast facts• Ninety-one percent (91%) of all payday loans are made to borrowers with five or more payday loans per year. • Predatory payday lending costs American consumers $3.4 billion per year in excess fees. • Only one percent of all loans goes to one-time emergency borrowers. • In the last decade, the number of payday lending stores in the US has grown from 300 to 15,000, generating $25 billion in loan volume. • Each year, more than five million Americans are caught in the “debt trap” of payday lending. |
employee advantage payday loan alternative
Employee Advantage Payday Loan Alternative — Combating the Payday Loan Trap
Low- and moderate-income people in rural communities have few affordable options to meet their emergency cash needs. Approximately 650 payday lenders in Kentucky are presently preying on those who are overextended on personal credit and have negative cash flow to make everyday purchases and pay existing debt. Check-based loans cost triple-digit interest rates, typically 390% to 780% effective annual interest rates.
To address this problem MACED is developing a new loan product to be offered through regional businesses that provides an alternative to high cost payday loan services. We plan to offer a six to nine month term loan aimed at reducing dependency on payday loans. Our goal is to help customers break out of the cycle of debt by offering a product that allows them to retire existing loans, access cash at lower cost where necessary, develop a stronger personal financial plan and connect them to other financial services.
This effort supports MACED’s engagement in helping state decision-makers understand the negative economic impacts of current payday lending regulations and promote alternative strategies. An editorial about the payday lending dept trap written by a MACED staffer was published in the Lexington Herald-Leader. Click here to read the editorial.
Contact MACED Program Manager Larrey Riddle at 859-986-2373 or lriddle@maced.org for more information.
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