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The payday lending industry, which offers consumers an advance on their paychecks, has experienced significant growth in the past two decades. Currently, there are approximately 23,000 payday lenders in the United States. To put things into perspective, this number surpasses the count of McDonald’s restaurants in the country, which is only 13,438.
Nevertheless, recent regulations have been implemented to address concerns related to payday lending. The Consumer Financial Protection Bureau (CFPB) expects that these regulations will help stabilize the payday loan industry. As a result, loan volumes are projected to decrease by about 65%, and the number of physical storefronts is predicted to decline by 71%-76%.
In addition to physical locations, online payday loan businesses have experienced a significant surge in usage. Annually, around $9 billion is paid in payday loan fees. The CFPB aims to witness a dramatic reduction in the number of payday loan stores, particularly given the challenges brought about by the ongoing COVID-19 pandemic. In fact, about 3% of Americans have reported resorting to payday loans, deposit advances, or pawn shop loans due to the financial difficulties caused by the coronavirus.
Can I Find Payday Loan Lenders in My State?
Great news! There are payday loan lenders available in some states. As of April 2023, you’ll be pleased to know that thirty-seven states have specific statutes allowing payday lending. These states include Alabama, Alaska, California, Colorado, Delaware, District of Columbia, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin, and Wyoming.
Which States Have the Most Payday Loan Stores?
Are you wondering which states have the highest number of payday loan stores? Let’s dive into the statistics! I found some interesting research that looks at the number of payday storefronts in each state per capita. According to the data, California takes the lead with 2,451 payday lenders, followed by Tennessee with 1,344 and Mississippi with 1,100. But that’s not all! The research also indicates that the states with the highest concentrations of payday loan businesses per 100,000 people are New Mexico with 41.78, South Dakota with 40.01, and Mississippi with 38.67. Isn’t it fascinating to explore such information?
Which States Have the Fewest Payday Loan Stores?
If you’re looking for places with the lowest number of payday loan stores, Rhode Island is your best bet! In the entire state, you’ll find just five lenders offering payday loans. So if you’re in Rhode Island, you have fewer options compared to other states where payday loans are legal.
Are Payday Loans Allowed in Your State?
Payday loans are not currently allowed in the following states: Arizona, Arkansas, Colorado, Connecticut, Georgia, Maryland, Massachusetts, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, South Dakota, Vermont, West Virginia, and the District of Columbia.
In other states, there may be rate caps that limit the annual percentage rate (APR) that lenders can charge you.
How Many Payday Lenders Are There in Each State?
|State||Number of Payday Lenders||Payday Lenders Per 100,000|
|New Jersey||No data||0|
|New York||No data||0|
|North Carolina||No data||0|
|West Virginia||No data||0|
Understanding Payday Loan Regulations across States
- Interest rate caps: In order to safeguard consumers, certain states have set maximum interest rates that lenders can charge on payday loans. This can be either a fixed rate or a variable rate. For instance, in New York, the Annual Percentage Rate (APR) for payday loans is capped at 36%.
- Loan amount limits: To prevent borrowers from taking on excessive debt, some states place limits on the amount that can be borrowed through a payday loan. In California, payday loans are currently capped at $300.
- Loan term restrictions: To ensure that borrowers are not caught in long-term debt, some states impose limits on the duration of payday loans, commonly between 2-3 weeks. Additionally, some states require lenders to offer extended payment plans to borrowers who are unable to repay their loans on time.
- Cooling-off periods: Recognizing the importance of avoiding a debt cycle, certain states enforce a cooling-off period between payday loans. During this time, a borrower is not allowed to take out another loan, establishing a buffer to protect individuals from falling into further debt.
- Database requirements: In order to prevent borrowers from taking on multiple loans simultaneously, some states require lenders to report loan information to a centralized database. This helps regulate lending practices and promotes responsible borrowing.
- Borrower protections: Certain states implement specific measures to protect borrowers. These can include mandatory disclosures by lenders, such as providing clear information on the total loan cost and the APR. Furthermore, some states prohibit lenders from engaging in certain practices, such as rolling over loans or harassing borrowers for payment.