Payday Loan Debt Rates by U.S. Demographic

Payday Loan Debt Rates by U.S. Demographic

On average, approximately 12 million Americans are using payday loans on an annual basis. According to PEW research, 5.5% of the nation’s adult population has used some form of payday lending service within the last 5 years, with ¼ of people using an online lending service and ¾ using storefront lenders.

Exploring Payday Loans within Demographic Regions

The staggering rates at which people are using payday lending services (otherwise known as cash advances, title loans and fast cash), has continued to rise in recent years. However, with these small, short-term loans being regulated at the state level, and some states not regulating them at all, many borrowers are falling into a vicious cycle of continued borrowing and debt in order to stay afloat.


Figure 1

payday loan debt rates by state percentages demographics

What Percentage of People are Using Payday Loans by State?

One of the biggest reasons that the percentage of American adults who use payday loans vary so much from one state to the next has to do with how each state regulates payday loans. However, there is some interesting demographic data that can be found regarding the use of payday loans.

For instance, the rate of consumers who have used payday lending services is substantially higher in urban areas. In addition, it is also higher for those who live in Exurban and Rural areas. While those living in Suburban areas and Small Towns saw the lowest rates of payday loan usage.

Figure 2

payday loan usage by US demographics

According to a recent PEW research report, payday loan usage is the highest in the Midwest and southern regions of the U.S. In particular, Oklahoma and Missouri topped the scales with 13% and 11%, respectively.

While Oklahoma has laws that restrictive terms on payday lending and uses a real-time, statewide database to ensure that they are being met, research shows that the states with the most payday lending services per capita include Oklahoma, South Carolina, Louisiana, Mississippi and Alabama. This trend shows a worrisome concentration of lenders in the southern and southeastern regions of the U.S.

Figure 3 – PEW Research Report

Payday Loan Usage by Geographic Grouping

Figure 4 – Courtesy of Auburn University 2014

payday lending companies and the percentage of people who use their services by state

When viewing these two demographic images, it is easy to see the correlation between the concentration of payday lending companies and the percentage of people who use their services.

Interestingly enough, states where payday lending services have been banned entirely see the lowest rates of payday loan usage. This tells us that consumers are not traveling to nearby states or searching for payday lenders online. In addition, these states have also reported lower rates of bankruptcy and indebtedness of consumers.

“If faced with a cash shortfall and payday loans were unavailable, 81 percent of borrowers say they would cut back on expenses. Many also would delay paying some bills, rely on friends and family, or sell personal possessions.” – PEW Research Survey

Expect More Research on Payday Loans

With new proposals being put forth regarding the stricter regulation of payday loan services, many proponents of the industry have stated that consumers without access to their services would suffer greatly. However, when you consider the research and data being presented, it is cause to wonder if America would be better off without or with very little payday lending service available.

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