We are reviewing the top five states with the most payday loans and at number five it seems Oklahoma and payday loans go hand in hand!
Many people may look at this list and think that it is a bad thing to be at or close to the top but that is not necessarily true and we will explain why we think this way in this article.
We will also take a look at why Oklahoma is number five and what it means for the people who live in this state.
There is an agency called the Consumer Financial Protection Agency (CFPA for short) that monitors all kinds of banking actions and rules and it also keeps track of the markets.
In 2018 Oklahoma came up number five on their list of states with the most payday loans issued per capita and we thought we would take a look at the top 5 and see why they each made the list and today’s article features Oklahoma.
They also do reports on markets and keep track of laws and regulations and even consumer complaints on businesses in the lending field and they also report who has the most payday loans in their states.
Why did Oklahoma make the top 5?
The simple answer is because they wrote the fifth most payday loans out of the 36 states that still allow these loans to be written, but the answer goes much deeper than that.
There are several reasons for the numbers here with the biggest one being this state has more people than most living from paycheck to paycheck and do not qualify for conventional loans.
Oklahoma, which sits at 1 in 8 residents is double the amount of loans per resident than the average of 1 in 20 in the rest of the country.
Another big reason 1 in 8 people in Oklahoma use these loan services is the lack of strongly written laws protecting the consumers against predatory lending.
By allowing more than one loan at a time this increases the amount of loans significantly and also raises the likelihood of the borrower getting behind, which in turn leads to more loans, to the tune of borrowers in this sate will take out on average 10 of these loans every year.
Even one more contributing factor is the number of lenders that are doing business in this state. When the lending laws are friendly towards the borrowers this creates a very user-friendly environment which draws in more and more lending companies.
Now these numbers seem pretty negative and we agree when the borrower gets in too deeply these loans live up to their nicknames of preditory loans but we did say earlier in this article that the use of these loans was not always a bad thing!
Let us explain what we mean by this!
When a payday loan becomes a good loan
There are times when a person simply needs to find some emergency money and his or her only hope is getting an advance loan.
The reasons can range from saving your job or even getting life saving medication for themselves or a loved one and yes, even paying a fine and staying out of jail, the list can be long.
What gives these loans a bad reputation is when the borrowers keep extending them and only paying the interest owed each payday and people will do this, on average up to 8 times for every loan they take out!
This adds up to a terrible cycle called the payday loan trap.
This activity must be avoided at all costs!
Just pay the loan off in full on the first due date and there will be no more threat of any harm from the loan, it will be satisfied. It is that simple, but people have a way of making things less than simple and we understand, all of us here have been on both sides of the fence ourselves!
Even with being in the top 5 in states that allow payday loans it is not all bad news if a borrower uses these loans in the right way, they still must be called preditory and can destroy lives if they get out of hand, and they are set up to do just that.
We hope this article helps you understand the dangers of these loans and if you must use them how to limit the risks substantially.