Utah Study Finds Only 7% of Payday Loan Borrowers Run Into Issues
After the Utah Department of Financial Institutions released a report regarding the status of payday loans in Utah, there was a lot of buzz. That report stated approximately 53,000 payday loans exceeded the maximum 10-week limit in 2014, and almost 46,000 had not been paid by the time they came due. Representative Brad Daw took that information to discuss tightening restrictions on payday lenders.
What was overlooked in this study was the number of loans taken out in 2014 that were paid back on time. While overall interest rates on payday loans are high, those rates are based on a year. If you really need the money, as long as you pay the loan back in two weeks, or the time frame given with the loan, payday loans can be extremely helpful.
Misrepresenting the Truth
Community Finance Services Association of America took a closer look at payday loans in the state. Only nine complaints against payday lenders were filed in 2014. What’s more important to know is that about 7 percent of borrowers ran into issues. Another 93 percent borrowed and paid back the money on time. In addition, the Utah Commissioner of Financial Institution reported that payday loan interest rates actually declined between 2013 and 2014.
Be Smart About Borrowing
Before signing any loan, be it a mortgage, car loan, or payday loan, you should always do your research. Use online loan calculators to see if you can truly afford the interest and what that interest will come to. Weigh the cost of bouncing a check or paying your credit card or loan late. Often, the cost of a payday loan is the better option.
9 out of 10 borrowers completed a Harris Survey and reported that before they agreed to a payday loan in Utah, they exhausted other avenues and carefully weighed the pros and cons. More importantly, 96 percent of borrowers say they had a positive experience taking out a payday loan and would do it again if they needed to.