Payday Loans and Tax Time

Payday Loans and Tax Time The average payday loan customer takes out a $375 loan, advertised to last two weeks. But she ends up indebted for five months of the year. She also pays $520 in finance charges on the $375 principal. 3 4 O $520 8. 9. 10 11 12 How do payday borrowers retire their debt? Payday borrowers often end up paying off their debt with some type of cash windfall, like help from friends or family, or another type of loan. Many borrowers pay off their loans with tax refunds. One in six retires payday loan debt with a tax refund. The Pew Charitable Trusts is researching payday loan products with a focus on studying the impact on borrowers. Visit pewtrusts.org/small-loans to find out more. PEW CHARITABLE TRUSTS The Pew Charitable Trusts, 2013