New research shows online payday loan borrowers rack up steep fees
Online payday loans, also known as “cash advances” or “check loans,” can offer quick access to money. There are often steep fees involved in repaying online payday loans, making them a high-cost avenue for people who may already be struggling.
We recently released a study about payments for online payday loans and other high-cost online loans and their effects on consumers. We found that online lenders’ repeated attempts to debit payments from a borrower’s checking account add significant costs to online payday loans. Specifically, we found that after the first failed payment request, 70 percent of second attempts fail to collect money from the borrower, leading to more fees, and that later attempts are even less likely to succeed.
You can read about the research in the report or in our press release.
We hope our report helps consumers understand how online payday lending payments work and what it could mean for their situation.