2015 Payday Loan Statistics for California

Editor’s note: The Consumer Financial Protection Bureau is finalizing new rules for payday, car title, and high-cost installment loans. They want to hear from YOU about your experiences and recommendations for the loans. Please take two minutes to provide your insights here. 

California Payday Lending Statistics

1) Total Number of loans:  Approximately 12.3 million loans were made in California in 2015 and the aggregate dollar amount of the loans was about $4.2 billion.

2) Average number of loans and average APRs: The average number of loans per customer was 6.5, paying an average APR of 366% (average APR increased 5% from 2014).[1]

3) Repeat borrowers and “churning” of loans: Contrary to loans being advertised as a “one time fix for emergencies” the number of Californians who obtained 10 payday loans (462,334) was far greater than the number who only had one loan (323,870). Subsequent transactions by the same borrower accounted for 76% of the total number of loans made in 2015 with 47% of subsequent loans made the same day a previous loan transaction was paid off and another 23% happening within 1-7 days.

CA DBO new report number of transactions

Graph is from CA Dept. of Business Oversight Report on 2015 Payday Lending Statistics

4) Churning profits: 64% of fees in 2015 ($53.53 million) – came from customers who had seven or more transactions during the year.

Fees collected

Graph is from CA Dept. of Business Oversight Report on 2015 Payday Lending Statistics 

5) Repossessions: 16,989 car title loans resulted in the consumer’s car being repossessed in 2015.[2] At the national level, the CFPB has found that 1 in 5 car title loans ultimately results in a repossession.[3]

6) Fees: California payday loan consumers pay over $507 million annually in payday loans and over $239 million in car title loans.  This ranks California in the #2 spot for highest amount of fees paid for car title and payday loans.[4]

7 Economic drain: Payday lending is an estimated $135 million net drain on California’s economy every year and subtracts 1,975 jobs.[5]

Customers age

Graph is from CA Dept. of Business Oversight Report on 2015 Payday Lending Statistics on ages 

The California Reinvestment Coalition builds an inclusive and fair economy that meets the needs of communities of color and low-income communities by ensuring that banks and other corporations invest and conduct business in our communities in a just and equitable manner.

You might also be interested in these payday lending posts:

Editorials Against Payday Lenders (As of July 2016, there’s been more than 150 editorials written from around the country about the financial harm caused by these lenders).

Payday Lender Hall of Shame This industry is known for spectacularly shady practices against its consumers. We’ve compiled some of the worst.

8 Reasons Not to Get An Online Payday Loan Is that really a lender’s website you’re on?  Or is it a broker who will re-sell your sensitive information repeatedly?

Data Sources:

[1] CA Dept. of Business Oversight press release, available at: http://www.dbo.ca.gov/Press/press_releases/2016/2016%20CDDTL%20Annual%20Report%20and%20Industry%20Survey%20Press%20Release%2007-06-16.pdf

[2] CA Dept. of Business Oversight 2015 CFLL annual report, available at: http://www.dbo.ca.gov/Licensees/Finance_Lenders/pdf/2015_CFLL_Aggregated_Annual_Report_FINAL.pdf

[3] Consumer Financial Protection Bureau press release, available at: http://www.consumerfinance.gov/about-us/newsroom/cfpb-finds-one-five-auto-title-loan-borrowers-have-vehicle-seized-failing-repay-debt/

[4] Center for Responsible Lending report, available at: http://responsiblelending.org/sites/default/files/nodes/files/research-publication/crl_statebystate_fee_drain_may2016_0.pdf

[5] Insight Center for Community Economic Development report, available at: http://ww1.insightcced.org/uploads/assets/Net%20Economic%20Impact%20of%20Payday%20Lending.pdf

The 10 Most Popular Stories in Consumer Finance in 2014 on CRC’s blog

What were the most popular posts on the CRC blog in 2014?

1) Most popular: City of Los Angeles Lawsuit Against Chase, Wells Fargo, Citigroup, and Bank of America

The City of Los Angeles filed a lawsuit against JPMorgan Chase for targeting minorities for predatory mortgages and the subsequent economic damage when these loans went into default.  The City Attorney, Mike Feuer, has already sued Wells Fargo, Citigroup Inc, and Bank of America for the same issues.  See this Law 360 article on a new lawsuit filed in December 2014:  LA Sues JPMorgan, BofA, Citi Over Discriminatory Lending

2. New Resource for Widowed Homeowners Facing Foreclosure

The “widows and orphans” problem refers to the fact that many widows, orphans, and others who inherit or have an ownership interest in property have faced foreclosure upon the death of a loved one because they were not listed on the loan, and the servicer would not work with them so that they could keep the family home.  See the recent announcement from the CFPB that they will providing additional updates to these rules here: CFPB Proposes Expanded Foreclosure Protections

3. Editorials Against Payday Lenders

How do over 50 newspapers feel about the payday lending industry?  Take a look and learn why advocates are excited about the Consumer Financial Protection Bureau’s upcoming rule-making for an industry who had a number of scandals in 2014.

4. The Payday Lender Hall of Shame

This is the worst of the worst when it comes to payday loan stories- here’s just a small sample, be sure to read the full post, and while you’re at it, sign our petition to CFPB Director Richard Cordray.

  • 1,000 text messages sent to a man after his suicide from debt collectors?
  • $83 million in campaign contributions made by the payday loan industry to prevent strong consumer protections from being enacted into laws
  • Training manuals that tell payday loan staff how to keep customers caught in the debt cycle

5. Banc of California Acquisition of 20 Banco Popular Branches Opposed 

After CRC members and allies opposed this acquisition, Banc of California agreed to create a public, 5 year community benefit and reinvestment plan.

6. Community members gather in Oakland to Celebrate California Reinvestment!

While CRC members and allies are serious about economic justice, they also know how to have fun.

7. Community leaders protest sale of 20 local Banco Popular Branches in Los Angeles

CRC members and allies held a press conference in front of a Banco Popular branch in LA as part of our initial opposition to Banc of California purchasing 20 Banco Popular branches.

8. John Oliver and Sarah Silverman on Payday Loans  

This post is self-explanatory, but if you watch the video, know that this industry is so bad there’s some adult language used by Mr. Oliver and Ms. Silverman.

Our favorite line? 

After a payday lender says “If you can’t pay the loan, don’t worry, we’ll be there to work with you.”

Oliver responds “No S*** you’ll be there, your business model depends on it!

(He’s referring of course to the debt trap that is sprung for the majority of people who take out a payday loan and find themselves unable to repay it two weeks later).

9. Bank Payday Loans No Longer Offered By Wells Fargo or US Bank

CRC was particularly happy to see this announcement after our opposition to banks providing these “direct deposit advance” loans that were very similar to payday loans.  Of course, we’d still like to see the banks get completely out of the business of payday lending, and stop providing financing to these modern day loan sharks.  For more on the financing that main street banks provide to payday lenders, see the report “Connecting the Dots” from our ally, Reinvestment Partners, based in North Carolina.

10. 80 Organizations Call on Federal Government to Address Private Equity and Investor Landlords

Have you heard about Wall Street’s latest profit scheme?  After millions of homeowners lost their homes to foreclosure, private equity is now moving into the housing market, buying roughly $200 billion worth of single-family homes, with the intent of securitizing the rental income…sounds familiar, doesn’t it?  Just look out if you’re a first-time homebuyer (hard to compete with all cash offers), a tenant (you might get booted to make way for higher paying renters), or a community, whose makeup could be changed thanks to the new landlords.

And, our three honorable mentions (we should point out that the OneWest post is only a few weeks old, so it was at a distinct disadvantage!)

A.  Community Leaders Hold Press Conference at OneWest Bank Headquarters 

In December, CRC received a response to our FOIA request to the FDIC, asking how much money the FDIC has paid out and expects to pay out in the future, under controversial shared loss agreements with the bank.  We released the figures (OneWest is on track to receive a whopping $2.4 billion by 2019!) at a press conference with our members and allies in front of the bank’s headquarters, where we called on the Federal Reserve to hold public hearings about this proposed, Too Big To Fail bank merger.  CRC also called on the bank to implement a foreclosure moratorium for surviving spouses whose mortgage is serviced by a OneWest subsidiary, Freedom Financial.  Read Kevin Stein’s HousingWire post to learn about three elderly homeowners who were facing foreclosure by OneWest Bank, and why we’re urging the bank to implement a moratorium until HUD develops rules to address situations where surviving family members are facing foreclosure due to a reverse mortgage.

B. Why we need Operation Choke Point to stop Illegal Online Payday Lenders

Payday lenders need access to your checking account in order to process the loans.  Learn more about Four Oaks Bank, and how 14 consumers were harmed by the bank playing an enabling role in processing illegal predatory loans.

C. Tenants Rights After a Foreclosure Upheld by California Court of Appeal

The story of a bank becoming the owner of a home after a foreclosure trustee sale is common in California.  Unfortunately, so is the experience of these two tenants who had continued paying their rent and should not have been evicted.  After a trustee sale, some real estate agents will try and get the current tenants out of the property as quickly as possible, offering cash for keys, making illegal threats, or even calling the police.  Tenants may or may not know their rights, and the real estate agents may take advantage of this and try and force them out quickly.