For many Oklahomans in a financial trouble, payday loans can seem like a quick and easy fix. Borrowers can take out a payday loan for up to $500, secured by a post-dated check, usually for a period of 12 to 14 days. Under Oklahoma’s deferred deposit lending act, payday lenders can charge $45 in fees for a $300 loan, which amounts to an APR (annual percentage rate) of 391 percent.
While some borrowers turn to payday loans for an emergency car repair or other one-time needs, the industry’s successful business model is built on repeated borrowing by customers facing chronic financial difficulties. Data from Oklahoma’s payday loan database revealed that a majority of all loans went to borrowers who took out twelve or more loans over the course of a year — or an average of more than one loan a month.1 Fifty-three percent of all borrowers took out seven or more loans in a year, compared to just 28 percent who took out three loans or less. The average customer who comes up chronically short of being able to pay their monthly bills paid $324 in fees to payday lenders in 2014.
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