According to The News Journal, payday loan applications are on the rise throughout Delaware. The payday advance industry in the state has grown from just a few hundred outlets a decade ago to more than 20,000 today. They lend an estimated $40 billion a year, usually in $200 to $500 increments.
“This market is incredibly dynamic,” said Matt Fellowes, a researcher at the Brookings Institution, a nonprofit think tank in Washington, D.C.
Fellowes and other experts spoke at a forum Friday at the University of Delaware titled “The High Cost of a Low Income,” which focused on the impact of payday lenders, check-cashing outlets and title-loan companies. Some of those businesses prey on unsuspecting consumers, and the high interest rates and fees charged by all of them can add up quickly, experts said.
Fellowes’ study of lenders specializing in payday advances nationwide matches The News Journal’s analysis of state and federal banking data, which showed that such financial institutions have become common in all kinds of Delaware neighborhoods.
In Delaware, 300 such businesses have taken their place alongside the 260 mainstream bank branches in middle-income neighborhoods and commercial districts throughout the state, data show. No longer confined to poor urban areas, they dot strip malls along Kirkwood Highway outside Wilmington, DuPont Highway through Dover and Del. 1 through Rehoboth Beach, with neon signs promising 10-minute approvals for borrowers with bad credit.
New Castle County is home to almost half of the state’s alternative lenders. About 84 percent of them are in neighborhoods where the median household income is between $30,000 and $75,000.
“These aren’t poor neighborhoods,” Fellowes said.
(Read on …)