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Tuesday, March 25, 2014

CFPB Report on Payday Industry

The CFPB released a new report on the payday industry. Key findings include:
  • Over 80% of payday loans are rolled over or followed by another loan within 14 days. The CFPB defines loan sequence as a series of loans taken out within 14 days of repayment of a prior loan.
  • 15% of new loans are followed by a loan sequence at least 10 loans long. Half of all loans are in a sequence at least 10 loans long.
  • Monthly borrowers are disproportionately likely to stay in debt for 11 months or longer.
  • Most borrowing involves multiple renewals following an initial loan, rather than multiple distinct borrowing episodes separated by more than 14 days. Roughly half of new borrowers (48%) have one loan sequence during the year. Of borrower who neither renewed nor defaulted during the year, 60% took out only one loan.
This is the second CFPB report in the past year on the payday lending industry, which the CFPB was charged with overseeing under the 2010 Dodd-Frank law. The Bureau is expected to unveil new payday regulations later this year.

Read the full report.

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