Utah Editorial Focuses on Payday Advances, Cash Loans

Historical archive, first published 2006 — payday-lending laws and rates have changed since. Preserved for the record.

AARP Utah appreciated the December 17 article about payday loans, but there is more to the story. And Laura Polacheck, Associate State Director of the organization, recently wrote in to The Salt Lake Tribune about it …

According to the Center for Responsible Lending, 99 percent of cash loans go to repeat customers and the average borrower repays a single loan eight times to the same lender. The average annual percentage rate for payday loans in Utah is 417 percent.

Payday lenders argue that an APR is an unfair comparison because these loans aren’t taken out for a year. But the cost of credit is always measured by an annual rate.

Payday advance lenders also argue that competition keeps prices fair, yet Utahns paid more than $69 million in interest charges above the initial interest rate collected. Nationally, the average payday borrower pays $800 to borrow $325.

The military considers these bad credit payday loans predatory and called upon Congress to act. Shouldn’t we do the same for consumers in Utah?