Many payday lenders left the business due to various reasons and many borrowers had to look for alternate means of short term funding.

The Dartmouth Study revealed that many payday borrowers had to look for other means of financial help which were more expensive as compared to payday loans, late bill payments or overdrafts. They were better off when payday loans were easily available.

The Dartmouth Study covered the changes that occurred during the period June 07 –December 07. It studied the changes in the financial conditions of Oregon households after the “cap” date and before the “cap” date. It used the equivalent Washington houses as “control”.

The Dartmouth Study also pointed out that compared to the Washington households, the Oregon families had greater chances of facing a decline in their financial conditions. The results were mentioned in terms of their present and future conditions.

The Dartmouth study concluded that if payday loans are restricted then it turns out to be more harmful for the borrowers in financial sense. The payday loans are expensive but during emergencies they do help people be on their own and give them the vital support to move on.. this was remarked by Professor Zinman.

Consumer Credit Research Foundation had funded the study and it didn’t participate in the study by not analyzing the data of the study and neither drafted any material of the study. You may find the detailed report of The Dartmouth Study at:
Zinman Restricting Access

Share this Page!

According to an industry insider, this is what a Short Term Loan Customer looks like:

• There are 60 million unbanked or under-banked Americans
• 25 million payday loans a year in the U.S.
• These people exist outside of the financial mainstream
• They have exhausted all resources – friends, family, credit cards
• Banks and Credit unions will not service these consumers
• Online payday customers are very sophisticated:

o   Average age is 43

o   Predominantly women

o   Have a computer and internet access

o   Average income of $45k a year

o   Over half have some college

o   Over one third own their home

o   All have bank accounts

o   All have jobs

• These are not poor people, they are poor money managers
• Studies by the Federal Reserve and several universities show restricting consumers access to payday loans results in a spike in bank overdraft fees, an increase in foreclosures and bankruptcies

Share this Page!