45k payday loans still unpaid after 10 week max, Utah report finds

45k payday loans still unpaid after 10 week max, Utah report finds

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SALT LAKE CITY — More than 45,000 loans from payday lenders in Utah went unpaid by the 10-week limit in 2014, according to a new state report.

The report comes from Utah's Department of Financial Institutions, that released the data for the first time since legislation was passed in 2014 to require additional reporting from deferred deposit lenders. Sixty institutions submitted their numbers.

A total of 53,777 deferred deposit loans were carried to the 10-week maximum in 2014, according to the report. Of those loans, 45,655 weren't paid in full by the end of the terms.

"Payday lenders claim that their business model is you come in, you get a loan for two weeks to pay off some kind of emergency short-term kind of debt... and in two weeks you will be able to pay it back," said Rep. Brad Daw, R-Orem. "But the reality that these numbers show is that a huge number of these loans, they get rolled and rolled and rolled."

The average loan amount was $373, with an average annual interest rate of 481.77 percent. The total dollar amount of the loans carried to 10 weeks was $21,359,528, according to the report.

The total number of loans issued in 2014 was not disclosed, so it is unclear what percentage of loans are among the 46,655 loans that carried a balance after 10 weeks. The number of people who took out the loans is also unknown.

Once a loan is carried to 10 weeks, borrowers can enroll in a 60-day extended payment plan where payday lenders can't charge any additional fees or interest on the amount if the borrower stays current on payments. Rep. Jim Dunnigan, R-Taylorsville, sponsored the legislation requiring increased reporting from lenders. He said he hopes people are able to take advantage of the 60-day period.

"Anecdotally, we're told that people take out a loan and then they take another loan to pay the first one, so the reason for the 2014 legislation was (to answer the question) 'how do we help people break that cycle?'" Dunnigan said. "If that cycle is going on, and certainly it is for some people, how do we help them exit that? We give them about a two-month period where there is no fees, there is no interest so they can pay off the loan and get out of that cycle."


There is a lot of money to be had in keeping people in a debt trap.

–Rep. Brad Daw


Daw argues that to get at the root of the problem, additional legislation needs to be passed that limits the number of payday loans any one person can obtain. He said payday lenders have little incentive to prevent people from taking out more loans than they can afford because eventually the lenders will find a way to get the money back.

Looking at the numbers from the 2014 report, Daw said that lenders would earn roughly $15 million in interest on the $21 million amount that was carried out to the 10-week maximum before they even get the $21 million back.

"There is a lot of money to be had in keeping people in a debt trap," he said.

Daw said the 2014 legislation is a good step forward. Dunnigan worked with the DFI to determine what data would be most useful in looking at the payday lending industry in Utah.

"It's beginning to sort of peel back the cover of what is going on with these payday lenders," Daw said.

Contributing: Mary Richards

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