MEMPHIS, Tenn. – Live at 9am this morning, WREG told you about a report showing that Memphis is # 1 in the nation for payday loans.
Jake Hill, from the company Debt hammer, told us about these loans and how they affect average people. Tennessee state law states that the maximum APR interest rate is 460% on a 14-day $ 100 loan.
Hill noted that Memphis and the South in general had a few issues: an underbanked population, lack of access to credit for the underbanked, and gambling.
“When you misinform borrowers, you’re going to have higher default rates. They will pay more for these loans. Hill said. “When you educate borrowers about microfinance, regardless of their income level, you actually see a much higher repayment rate. ”
Hill said that despite everything, people who don’t have access to credit still need credit. He cites concerns about fees as the reason many people avoid banking at traditional banks and not taking out credit.
Hill said not all loans are bad, but there are better ways to do it. He noted that online loans are still in a “Wild West” phase, charging interest at “700% on average”.
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