Indiana Institute for Working Families Releases Report on Payday Lending

Financial Drain:
Payday Lenders Extract Millions from Hoosier Communities

Payday Lending Report

The Indiana Institute for Working Families, a program of Indiana Community Action Association, has released its report, Financial Drain: Payday Lenders Extract Millions from Hoosier Communities. The report, prepared with the Indiana Assets & Opportunity Network, documents the scope and impact of payday lenders on Indiana's families and communities.

In 2002, the Indiana General Assembly granted payday lenders an exemption to Indiana's interest rate cap of 36 percent and criminal loansharking limit of 72% APR. Less than two decades later, 262 payday loan storefronts make small loans with rates up to 391% APR in Indiana. The Executive Summary in the report presents these key findings:

Eighty-six percent of payday storefronts are operated by out-of-state parent companies.
Storefront payday borrowers have a median annual income of $19,752 and borrow an average of eight to 10 loans per year.
Over the past five years, payday lenders have drained an estimated $322,049,432 in finance charges from these Hoosier borrowers.
Payday storefronts in Indiana are disproportionately located in lower-income neighborhoods and communities of color.
If this debt had been financed at 36% APR, these Hoosier borrowers and their communities could have benefitted from an additional $291,307,803 over the past five years to spend in their local economies.