Predatory Lending Statistics and Warning Signs

by Marsha Drennen September 25, 2022

The statistics surrounding predatory lending are quite disturbing

A typical two-week payday loan has an annual interest rate ranging from 391 to 521 percent.
The typical payday borrower remains in payday loan debt for 212 days of the year.
There are more than two payday lending storefronts for every Starbucks location nationally.
Research shows that payday borrowers are more likely to have credit card delinquency, unpaid medical bills, overdraft fees, and even bankruptcy.
It is estimated that predatory mortgage lending costs Americans more than $9.1 billion each year.
On competitive loans fees generally equal less than 1%, while predatory lending fees are often more than 5% of the entire loan amount

Five signs of predatory lending

High or hidden fees. Some fees can have an annual percentage rate of 300% to 400%! Prepayment penalties or balloon payments are common.
Loans that could trap you in a cycle of debt. More than four out of five payday loans are reborrowed within a month. Almost 25% of payday loans are reborrowed nine times or more.
No credit check. A lender who promises not to check your credit may seem like an answered prayer, but it could be a red flag that the lender uses unfair and deceptive practices.
Access to your bank account is required. Lenders may require you to write a postdated check for the full loan balance or that you allow them to electronically debit funds from your checking account.
The lender has a questionable reputation. Watch out for lenders who get a lot of negative feedback. Check the Consumer Financial Protection Bureau’s complaint database. Also check Yelp or Google Local.

To learn more about the dangers of predatory lending and how if affects the poor, read this article on Wiser.

How you can help First Fruits Ministries assist and educate women in need

First Fruits Ministries is a 501c non-profit dedicated to the betterment of women recovering from addiction, abuse and difficult family situations. We are based in the Birmingham, Alabama area and participate in many local market events, often employing the women we serve. We sell baked goods, hand-poured scented candles and select other crafts.

We also have two online stores. Visit our Shopify storefront to shop hand-poured scented soy candles and seasonal gift baskets. For an altogether different shopping experience, visit Best Bargain Deals Now, our eBay store. We have vintage and current magazines, collectibles, DVDs and so much more!