Undercurrent

Nevada ranks as 2nd most expensive state for payday loan borrowers

By: - April 7, 2022 4:21 pm
now that song is stuck in your head sorry

(Nevada Current file photo)

Borrowing $500 from a payday loan?

New research from Pew Charitable Trusts says Nevadans are charged an average of 602% and paying $924 for an installment short-term loan paid over the course of four months.

Only in Idaho do payday borrowers pay more, according to the research.

In 18 states and the District of Columbia, laws have been enacted that prohibit high-cost small loans outright or set low rate limits. Payday lenders do not operate in these jurisdictions.

state payday loan chart
18 states and the District of Columbia have laws that prohibit high-cost small loans outright or set low rate limits. Payday lenders do not operate in those restrictive jurisdictions. (Pew Research Center graphic).

Nevada has struggled to pass legislation to cap high percentage rates. In 2019, legislation proposing to limit interest rates at 36% failed to get a hearing. 

That same year, lawmakers voted to create a statewide database to track short-term payday loans. Legislators said data collected could help better monitor or regulate the industry.  

After receiving pushback from the industry and dealing with problems resulting from the pandemic, the database, which was supposed to be up and running July 2020, went operational in January

The statewide regulation, approved by lawmakers included provisions to prevent customers from taking out multiple loans that exceed 25% of their income. 

Four states – Colorado, Hawaii, Ohio and Virginia –  have passed some reforms to short-term lending practices since 2010. 

The average annual percentage rate in those states is between 114% in Colorado and 144% in Hawaii. Taking out a $500 short-term loan cost in those states costs range between $110 and $159 over four months.

In Idaho, which is similar to Nevada in having few safeguards for borrowing according to the research, average rates are 652% and could cost people $1,000 to take out an installment loan.

Pew recommended that “the 18 states without payday lending continue to prohibit high-cost loans and that other states either choose to follow those states’ lead or enact comprehensive reforms like those in Colorado, Hawaii, Ohio, and Virginia.”

“The experiences of those four states provide a clear blueprint for policymakers seeking to protect consumers and enable access to small-dollar credit,” the report notes. “And their approaches share four key ingredients: fair prices that are viable for lenders and borrowers, affordable payments, reasonable time to repay, and widespread access to safer credit.”

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Michael Lyle
Michael Lyle

Michael Lyle (MJ to some) has been a journalist in Las Vegas for eight years.  He started his career at View Neighborhood News, the community edition of the Las Vegas Review-Journal. During his seven years with the R-J, he won several first place awards from the Nevada Press Association and was named its 2011 Journalist of Merit. He left the paper in 2017 and spent a year as a freelance journalist accumulating bylines anywhere from The Washington Post to Desert Companion. While he covers a range of topics from homelessness to the criminal justice system, he gravitates toward stories about race relations and LGBTQ issues. Born and mostly raised in Las Vegas, Lyle graduated from UNLV with a degree in Journalism and Media Studies. He is currently working on his master's in Communications through an online program at Syracuse University. In his spare time, Lyle cooks through Ina Garten recipes in hopes of one day becoming the successor to the Barefoot Contessa throne. When he isn’t cooking (or eating), he also enjoys reading, running and re-watching episodes of “Parks and Recreation.” He is also in the process of learning kickboxing.

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