The volume of payday lending in the state and number of lenders has declined over the past two years after spiking in 2011, according to data released by the Oklahoma Department of Consumer Credit.
Oklahomans took out 803,675 deferred deposit loans in 2013 totaling more than $383.9 million, compared to 975,970 payday loans that added up to $399.1 million in 2012.
The number of payday lenders in the state also are in decline — from 356 in 2010 to 290 in 2013, the data shows.
A decrease in storefront locations for payday lenders is part of a national trend in the industry, said Diane Standaert, an attorney for the national nonprofit group Center for Responsible Lending, which has done several studies tracking the payday lending industry.
“The shrinking storefronts and decline of loan volume in Oklahoma is consistent with what we’ve seen in other states,” Standaert said.
Company revenue stable
However, with a shrinking number of lenders and loans in the state, payday lenders made $53 million in finance charges in Oklahoma in 2013 compared to $54 million in 2012, down just 1 percent. The number of payday loans Oklahomans took out decreased by 17 percent from 2012 to 2013, while the dollar amount of loans declined by just 3 percent.
“Payday lenders have sought to make up for a lack of growth by either making larger loans or charging more fees to try and squeeze more out of financially stressed consumers,” Standaert said. “They are draining $50 million in fees and finance charges every year despite the fact there are a fewer number of consumers and a fewer number of loans.”
It’s not likely that Oklahoma’s strong economy and low unemployment rate has caused a taper in payday lending in state, said Nathan Groff, chief government relations officer for Florida-based Veritec Solutions LLC. Veritec maintains Oklahoma’s payday lending database, which tracks payday loan transactions in the state.
“It really is counter-intuitive, but a high unemployment rate does not help payday lending,” Groff said.
That’s because deferred deposit loan users borrow against future earnings, and loans are typically due on the borrower’s next payday, Groff said.
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What are deferred desposit loans?
Deferred deposit loans, or payday loans are small, short-term loans that are usually repaid on a borrowers next payday. The loans typically carry high interest rates.
In Oklahoma, deferred deposit loans are capped at $500 per loan transaction and the terms of loans are limited to between 12 and 45 days. Oklahoma payday lenders also may not charge borrowers more $15 per every $100 up to the first $300 of a loan, and $10 per $100 thereafter in finance charges. Those finance charges translate into annual percentage rates between 405% to 341% depending on the amount borrowed.
State law also requires payday lenders to offer borrowers an installment repayment plan after debtors enter into a third consecutive loan.