Which U.S. States Apply for the Most Payday Loans?

Which U.S. States Apply for the Most Payday Loans

As of 2017, a study reported that there are an estimated 14,348 payday loan shops (slightly higher than the number of McDonald’s locations) in the United States. The distribution varies from urban to suburban, exurban, and rural areas. 

American states can be divided into two groups based on payday loan legality: those with statuses and those where payday loans are not permitted. States where payday loans are permitted are allowed to regulate the maximum amount, the percentage of interest, and the number of loan renewals that consumers can apply for.

Payday loans have become notorious for their high fees and debt traps, even though they are quicker to get than personal loans. However, it’s not difficult to get a payday loan. All the borrower has to do is present proof of work and a previous paycheck record. A borrower who takes out a $375 payday loan is expected to repay $520 in two to four weeks, resulting in a 390% interest rate.

Sadly, payday loan customers are more concerned about getting a loan than the exorbitant interest rates that go along with them. For example, on a $375 payday loan, the borrower is expected to return $520 in two to four weeks, resulting in a 390% annual percentage rate (APR). Still, consumers don’t focus on the mechanics and how they will return the loan as much as they focus on getting the loan itself.

Payday Firms per Capita

The ratio of payday firms varies from one state to another compared with the number of companies and people therein. New Mexico has the highest number of lenders, with a value of 41.78 payday lending companies per 100,000 people. South Dakota follows this with 40.01, Mississippi with 38.67, and then Alabama with 26.47.

State                   Payday Lenders per 100,000 APR           
New Mexico 41.78 416%
South Dakota 40.01 36%
Mississippi 38.67 520%
Alabama 26.47 456%
Tennessee  23.62 459%
Louisiana  22.58 391%
South Carolina 22.48 390%
Missouri 22.47 1950%
Utah 19.12 No limit
Kentucky 17.49 459%

Source: https://www.csun.edu/~sg4002/research/mcdonalds_by_state.htm

The average rate across all 10 states is 564%, indicating that payday lender fees may be expensive for borrowers. This explains why, even though most jurisdictions prohibit usury by restricting interest rates to between 35% and 40%, payday lenders continue to look for loopholes in various laws that allow them to charge exorbitant rates. As a result, it is up to borrowers to remain wary of tempting payday deals.

Some states have already taken steps to safeguard their residents from the exorbitant interest rates charged by payday lenders by establishing payday loan limit rates and regulating the service provider’s activities. Others have gone so far as to outright outlaw payday lending.

Arizona, Arkansas, Connecticut, Georgia, Maryland, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Vermont, and West Virginia are among the states that have banned payday lending.

Payday Loans in Cities

Payday advances are typically targeted to low-income earners and those who live near military bases because they are unsecured loans. These folks need money but can’t get a personal loan since they don’t have any collateral. Researchers from California State University reveal that there are over 14,000 loan store shops. The highest number of payday lenders are from California with 2,451; followed by Texas with 1,675; while the least is found in Rhode Island with 5. 

Payday Loan Statistics for the U.S.

Here are some facts about payday loans that are worth taking careful note of.

  • Thirty-six states permit payday loans with annual percentage rates averaging 391%. The remaining states prohibit these loans by capping rates at a low level or enforcing other laws.
  • An average payday loan borrower spends an average of $520 in fees to borrow $375 repeatedly.
  • Payday loans are usually due in two weeks and are tied to the borrower’s pay cycle.
  • A payday lender charges an average fee of $55 per two-week loan.
  • 52% of all borrowers are aged 25 to 44.
  • 9% of adults aged 25-29 have used a payday loan.
  • 2.9% of adults used a payday loan in states with the strictest regulations in the past five years.
  • 6.3% use payday loans in moderately regulated states.
  • 6.6% use payday loans in states with little regulation.
  • Only 5% of potential borrowers would use online payday loans or alternative sources in states with no payday lending stores – 95% choose not to use any payday loans.
  • Just 2% of people over 70 have used payday loans.

Payday Loans Near Me

If you live in any of the cities listed below, you can easily apply for a loan by visiting the nearest payday loan store or online loan. These states are Alabama, California, Colorado, Florida, Illinois, Indiana, Iowa, Kentucky, Los Angeles, Louisiana, Maryland, Mississippi, Ohio, Sacramento, San Diego, Tennessee, and Texas. You may fill out our online loan request form in less than 5 minutes, receive an instant decision, and have funds sent to you in as little as an hour. This is ideal for individuals who need cash quickly, whether for a vehicle breakdown, unforeseen household expenses, or other reasons.

What is the Best Online Payday Loan?

Payday loans are not one-size-fits-all. What works best for one individual might not be appropriate for another. To determine the best online payday loan, you’ll have to consider your details, including your present financial situation, credit score, the amount you want to borrow, and the loan period.

You need to fulfill the basic requirements: you need to have a stable monthly income of at least $800, be able to make repayments, be a legal U.S. citizen above 18 years of age, and have an active checking account that can receive funds.

When you’re in a bind and can’t see a way out, payday loans might help you get by. If you’re considering taking out a payday loan, there are a few things you should be aware of. We all want the assurance of knowing we’re making the best financial decision possible.

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    Which U.S. States Apply for the Most Payday Loans?