Protect Oklahoma Consumers by Curbing Payday Lending

In Oklahoma, deferred deposit loans, better known as payday loans, are advertised as a way for people to get emergency funds for a short-term loan. In practice, these loans prey on low-income borrowers by charging annual interest rates over 350 percent and by creating a cycle of debt that can be nearly impossible to break out of.

HB 1596 would enact sensible reforms to payday lending by limiting borrowers to one outstanding payday loan at a time, requiring a 1-day wait period between loans, and limiting borrowing to a  maximum of 90 days over the course of a year.

Where Things Stand (as of 3/3)

HB 1596 was assigned to the House Business, Commerce and Tourism committee. Committee Chair Rep. Elise Hall refused to allow the bill to be heard and it is now dead. HB 1596 or a similar measure could be taken up in 2018.

Talking Points

Download the talking points as a fact sheet [PDF]

Oklahoma has the chance to enact sensible payday lending reforms in 2017

  • HB 1596 limits borrowers to one outstanding loan at a time, requires a 1-day wait period between loans, and limits borrowing to no more than 90 days over the course of a year – or about 7 loans per year. These bills would  not prohibit payday lending but would ensure that customers don’t get trapped in a debt spiral.

Payday loans are an extremely expensive form of credit

  • Lenders can charge $45 for a $300 loan due in 12 days – an APR (Annual Percentage Rate) of 465 percent.
  • Oklahomans paid a total of $52.6 million in fees on payday loans in 2014.
  • “Usurious rates of lending in payday lending are not for the purpose of helping people lift themselves out of poverty. It perpetuates poverty.” – Rep. Kevin Calvey (R-Oklahoma City) [Source]

Payday lending is very prevalent in Oklahoma

  • There were over 320 payday lending outlets in Oklahoma in 2014.
  • Oklahoma is the number one user of payday loans per capita in the nation, according to a Pew Trust study. [Source]

Most borrowers use payday loans repeatedly for recurring expenses – not for one-time, emergency needs

  • A majority of all loans (50.6 percent) go to borrowers who take out an average of one loan per month or more. Nearly 75 percent of loans go to borrowers who have taken out 8 or more loans in a year. [Source]
  • A majority of borrowers (53 percent) take out 7 or more loans per year.
  • 69 percent of payday loan customers nationally say they took out their first loan for a recurring expense; just 16 percent borrowed for an emergency or unexpected expenses. [Source]

Payday lenders target economically vulnerable populations, including military families

  • Most of the payday lenders (199 out of 324) in Oklahoma are located within a 10-mile radius of military installations and bases. Census tracts with economically vulnerable populations (elderly, young adults, immigrants, and lower income) are more likely to be targeted by payday lending stores. [Source]

Many states and the federal government have restricted payday lending

  • 15 states prohibit payday lending entirely, while 8 maintain strong legal restrictions, including lower limits on fees or loan usage, or longer repayment periods.
  • Since Congress passed that Military Lending Act in 2007, loan companies cannot charge active duty military over 36 percent annual rate for some consumer loans, including payday loans.

There are alternatives to payday loans

  • Most payday loan customers say that if payday loans were unavailable, they would cut back on expenses, delay paying some bills, borrow from family or friends, or find other alternatives. [Source]

You can look up your Senator and Representative here, call the House switchboard at 405-521-2711, and call the Senate switchboard at 405-524-0126.

See our Advocacy Toolkit page for more information and resources.

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Former Executive Director David Blatt joined OK Policy in 2008 and served as its Executive Director from 2010 to 2019. He previously served as Director of Public Policy for Community Action Project of Tulsa County and as a budget analyst for the Oklahoma State Senate. He has a Ph.D. in political science from Cornell University and a B.A. from the University of Alberta. David has been selected as Political Scientist of the Year by the Oklahoma Political Science Association, Local Social Justice Champion by the Dan Allen Center for Social Justice, and Public Citizen of the Year by the National Association of Social Workers.

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