Home
»
Cash Advance News
»
Race Matters: Report Finds Predatory Lenders Set-up Shop in African American Neighborhoods
Race Matters: Report Finds Predatory Lenders Set-up Shop in African American Neighborhoods
PRNewswire-FirstCall
Mar 22, 2005
African-American neighborhoods in North Carolina have three times as manypayday lenders per capita as white neighborhoods, even after controlling for variables associated with the industry's purported customer base such asincome and homeownership.
"This study shows in the starkest terms that African-American
neighborhoods bear the brunt of predatory payday loans -- loans that are not even legal in North Carolina," said Mark Pearce, CRL president. "This onfirms that the abusive loans made by payday lenders are not just an issueof fair and responsible lending, but are a civil rights issue as well."
Payday lending is illegal in North Carolina, but large national chainssuch as Advance America, Check 'n Go and Check Into Cash continue to operateopenly by affiliating with out-of-state banks which contend they are exemptfrom state law. Nearly 400 stores operate in North Carolina, even thoughstate law hasn't permitted them since 2001. Currently, the North CarolinaCommissioner of Banks and Attorney General are investigating payday lendingactivity.
Because CRL looked at stores owned by the national chains, the CRL reporthas implications far beyond North Carolina's borders. Twelve states, in addition to North Carolina, are subject to rent-a-bank arrangements because payday lending is not authorized by their state legislatures (Michigan,Georgia, Pennsylvania, Maine, Arkansas, Massachusetts, West Virginia, NewYork, New Jersey, Connecticut, Vermont, and Maryland). In fact, over 3,000payday loans stores in the country are operating outside of the laws of their
state.
At a typical payday shop, a person short on money before payday borrows,$255 by writing a postdated check for $300. After two weeks the borroweroften can't repay the principal and writes yet another postdated check.Ninety-nine percent of payday loans are made to repeat borrowers, despiteindustry claims that the loans are for one-time, emergency use only. AdvanceAmerica has reported that their average number of loans per borrower was 9 per year in 2003.
CRL has previously estimated that predatory payday lending costs Americanfamilies $3.4 billion annually, a cost that is increasing rapidly as the sizeof the market explodes.
The CRL report, "Race Matters: The Concentration of Payday Lenders in
African-American Neighborhoods in North Carolina," along with charts and mapsof all metropolitan statistical areas -- illustrating the clustering patternin African-American neighborhoods -- is available from CRL athttp://www.responsiblelending.org.
ABOUT CRL -- The Center for Responsible Lending
(http://www.responsiblelending.org) is a nonprofit, nonpartisan research andpolicy organization dedicated to protecting homeownership and family wealth byworking to eliminate abusive financial practices. CRL is affiliated withSelf-Help, one of the nation's largest community development financial
institutions.
SOURCE Center for Responsible Lending, Durham, NC
Web Site: http://www.responsiblelending.org
