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Stress is a leading cause for health concern for many Americans, including large numbers of Latinos. One of the greatest stressors plaguing Latino families has to do with finances. In an effort to alleviate financial issues, more and more people – including Latinos – are turning to payday loans, the Center for American Progress reports.
According to the Pew Charitable Trust, nearly 12 million people each year turn to payday loans. These quick fix infusions of money regularly lead to the person receiving the loan going into hundreds, if not thousands, of dollars of additional debt furthering stress. According to the National Council of La Raza (NCLR), Latinos are more likely than the general population to use a payday loan.
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Payday loans, and their closely related product auto title loans, are both heavily advertised and marketed toward low-income individuals offering fast cash and quick approvals. These advertisements downplay the terms of the loans and the hefty fees that they carry. Payday lenders are more highly concentrated in communities that are majority black and Latino.
Borrowers of payday loans often pay interest rates that are annually above 300%; often times, they have to take out additional loans to pay off the first furthering the cycle. According to the Center for American Progress, nearly 80% of all payday and auto title loans are rolled over within two weeks of the initial loan; the fees taken by payday lenders equal out over $8 billion in interest and fees from these financially struggling individuals.
The stress of repaying the loans often becomes equal or greater than the original concerns. Stress can lead to severe physical and mental ailments that when left untreated can have serious consequences. The median payday loan borrower is in debt for more than six months and the typical borrower takes out eight loans each year.
Struggling borrowers are left with little control over their finances as payday and auto title lenders have access to either a bank account or vehicle; they take “priority” over all other expenses and often leave individuals with little income left to pay for critical needs such as rent, medicine, child care, and food. Roughly 1 in 4 loan borrowers can’t keep up with payments and see their bank accounts closed due to insufficient funds.
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By The Numbers
142
Percent
Expected rise in Latino cancer cases in coming years
