Gallery: Payday Lenders Multiply Around The Birmingham Metro Area
Alabama has more payday lenders per capita than all but four other states in the united kingdom, according to a study that is new Auburn University Some view these services as predatory to low-income or heavily African-American neighborhoods, plus some urban centers in Alabama are managing them. The study provides some gas for that argument: it discovered a dramatically positive relationship between the number of payday lending shops to the range banking institutions and bank branches therefore the percentage associated with population that is African-American. “Walmart doesn’t say, ‘Let’s go to the rural area where there is a populace of 90.’ You locate near your prospects. When a payday lender goes to a location where there’s a population that is large of, does it recommend one thing in regards to the sort of customers they truly are searching for?” said James Barth, among the research’s three co-authors as well as an Auburn professor.
Payday loan providers offer tiny uncollateralized loans that are short-term typically using flat charges rather than annualized interest. In Alabama, lenders are permitted to replenish to $17.50 per $100 borrowed – that translates to an annualized interest of 456 %.
Industry advocates say the lenders supply a service that traditional banking institutions can not – the fee on a loan that is short-term frequently less than facing a bounced check charge on an unanticipated medical bill or automobile fix.