Payday Lending Law is Providing Washington Borrowers a Way Out of the Debt Trap
Every year the Department of Financial Institutions (DFI) releases a report with information collected from the payday lending industry to look at payday loan usage in our state. The 2011 Payday Lending Report was just released and it shows that the law that went into effect on January 1, 2010 is giving Washington borrowers a way out of the payday lending debt trap.
- Washington consumers have saved millions of dollars in fees. In the first year the law was in effect the total number of loans went from 3 million in 2009 down to 1 million in 2010, saving consumers $122 million in fees. According to the 2011 report, those numbers dropped even further, with the loan volume down another 200,000 to 855,000 and consumers saving another $14.6 million in fees in 2011 alone.
- The number of payday lending locations decreased. 30% of locations closed in 2010, and the decreased another 40% 2011. Overall, the number of payday lending locations has decreased 65% since its height in 2006.
- People are taking out fewer payday loans. Prior to the law, the number of payday loans made in our state had been rising consistently for the past ten years and now the numbers are lower than they were in 2000.
At a time when poverty is rising and people need every penny to survive, these protections are allowing more people to save money and meet their basic needs, instead of paying high interest rates to payday lenders. This 2011 report again confirms that the law is working as intended. Fewer borrowers have been caught in the debt trap because they now have a way out of the payday lending cycle.
Jenny Storms, a Poverty Action member from Walla Walla said, “The payday lenders make it so easy and almost coax you into taking out loan after loan. I’m glad the protections are in place and you are not allowed to have so many anymore. This way you have a fair shot of not being in debt.”