The Kentucky Coalition for Responsible Lending
is a statewide coalition dedicated to
protecting family assets by eliminating
FACT SHEET #1
PROTECT KENTUCKY
FAMILIES FROM
PAYDAY LENDING!
PREDATORY PAYDAY
LENDING COSTS
THE COMMONWEALTH
* Kentuckians lost $158 million in
payday loan fees in 2008.
e Taking out a payday loan makes a
borrower 92 percent more likely
to become seriously delinquent on
their credit card during the year.
e Payday loans incre ase bank over-
drafts and closing of bank accounts.
e Bankruptcy filings increase with
payday loan use.
The majority of payday lenders in
Kentucky are nationally owned, and
their profits leave the state.
Protecting family assests,
promoting Peneaiile lending
101 Burch Court » Frankfort, KY 40601
Phone: 502-875-5863 » Fax: 502-875-5865
mail: KCRL@communityaction.org
//kyresponsiblelending.wordpress.com
abusive financial practices.
PREDATORY PAYDAY LENDING
IS A DEBT TRAP
© Over 40 percent of borrowers believe payday loan rates are less
than 30% APR, when in fact rates in Kentucky exceed 400% APR.
Nine out of ten payday loans are made to repeat borrowers who
take out nine or more payday loans in a year.
© The average cost of a $350 payday loan to Kentucky consumers is
$822.50 (that's $472.50 in interest!).
PROTECTION AGAINST PREDATORY LENDING
IS GOOD POLICY
© The U.S. Department of Defense pushed for and won changes in
federal law to cap interest at 36% APR for military families (ef-
fective October 1, 2007).
© 64 percent of Ohio voters supported the implementation of a 28
percent cap on payday loans.
¢ Arizona voters allowed the law authorizing payday lending to
sunset.
© Currently, 15 states (including neighbor states Ohio and West
Virginia) and the District of Columbia have laws capping rates or
do not authorize payday lending.
© The Supreme Court of Arkansas determined that payday lending
violates the 17% usury limit in the state’s constitution.
SOLUTION: LIMIT INTEREST ON
PAYDAY LOANS TO 36% APR.
Strong legislative action is needed to make payday
loans reasonable.
