Photo of a payday loan store.
The statistics on payday loans run contrary to what politicians would have you believe. CC by taberandrew/Flickr

Politicians have been batting around the issue of payday lending. In the United Kingdom, the number of payday loans taken out in four years has quadrupled. In states as diverse as Montana, Arizona, and Ohio, new legislation that limits payday lending has been passed. If S. 3245 passes the Senate, the Truth in Lending Act will be extended to cover the interest rate of payday loans.

What the numbers behind payday loans indicate

Understanding the payday loan industry and its customers is complicated by ubiquitous inaccurate and conflicting data. Many things that are said to be true of payday loans just simply don’t appear to be the case, according to a recent report by Personal Money Market. Most payday loan or short-term credit customers make over $ 47,000 in a year and have been working at one job for four years or more. According to an analysis by, only 20 percent of credit card customers actually understand their credit card agreements. In comparison, 95 percent of payday loan customers understand the charges they are paying.

How payday lending works in the numbers

There is a belief that all payday loan applications are approved — but studies have shown that up to 20 percent of applications are rejected. Over 20 percent of short-term loans, even with these high standards, have to be completely written off as a total loss. Goldman Sachs reported 27 percent profit to the SEC in April. Most payday lenders report between 8 and 10 percent profit — far from the “making money hand over fist” that is the general media perception.

Improving the substance of political discussions

It can be difficult to find a debate about payday lending that has been informed by unbiased statistics. Because payday lending has become a political issue across the country and around the world, it is very important to have complete, accurate, reliable statistics regarding the industry.

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