Where Do Payday Lenders Locate? Where They Can Easily Prey on People

( – promoted by Middle of the Road)

Aracely Panameno, the director of Latino outreach for the Center for Responsible Lending, was in town recently to meet with Latino community leaders. She presented them with the results of a recent CRL study that shows payday lenders nationally are nearly eight times as concentrated in neighborhoods with the largest shares of Latinos and African-Americans.

The experience in Colorado is much the same. Researchers at Colorado College found that payday lenders are more likely to locate in Front Range communities with higher percentages of racial/ethnic minorities, young adults, senior citizens, military personnel and immigrants.

In Denver, three council districts with heavy Latino populations are home to 83 percent of all the payday lenders in the city.

• District 1, represented by Councilman Rick Garcia, is 49 percent Latino and has 12 payday lenders, or 18 percent of Denver’s total.

• District 3, represented by Councilman Paul Lopez, is 77 percent Latino and has 17 payday lenders, or 25 percent of the city’s total.

• District 9, represented by Councilwoman Judy Montero, is 62 percent Latino and takes the cake with 27 payday lenders, or 40 percent of the total in Denver.

But Denver is not the only area where this pattern exists. Colorado Springs is home to 66 payday lending locations — all of them clustered in 12 of the city’s 56 ZIP codes. One of the lowest income neighborhoods has 19 payday lenders, or almost one-third of the city’s total, and eight payday lenders can be found in one of Colorado Springs’ highest minority neighborhoods.

Payday lenders are concentrated in six of Aurora’s 21 ZIP codes, most of them with large minority populations.

That might explain why more than seven out of 10 Latinos in Colorado support proposals to better regulate payday loans and cap them at the state’s 36 percent usury limit.

What is interesting is that most Coloradans feel the same way. More than six out of 10 Republicans, Democrats and independents support making payday lenders abide by the state’s 36 percent usury limit.

Coloradans get it! They understand that charging more than 300 percent for a loan is just not right.

26 Community Comments, Facebook Comments

  1. Lower income people need to use payday loan shark services more than upper income people, so why wouldn’t they locate in those areas.

    I don’t think it has to do with targeting easy prey, it’s just targeting their natural customer base.

    And, yes, there should be no exemption for payday loan services on usury laws.  If 36% APR is the limit, then it should be the limit for everyone.

  2. BlueCat says:

    so it’s only natural they will be located where there are more low income workers and workers who don’t use regular banking services. That’s their target market.   Minorities, such as Hispanics, are over-represented among that demo. They aren’t going to be located in Cherry Hills.  

  3. Steve Harvey says:

    The Bell is casting a spotlight on that fact.

    PR, I think you’re making a false distinction between “easy prey” and “their natural target base.” The two are one and the same.

  4.  One thing worse than a payday loan is being unable to get a payday loan.

  5. DaftPunk says:

    …Bentley and Ferrari dealers are more likely to be found in rich neighborhoods.

    People use this type of correlation to claim that Planned Parenthood is bent on black genocide by locating abortion clinics in poor neighborhoods.

  6. Michael Dorsett MD says:

    I would have thought they would locate their stores in The Polo Reserves or Cherry Creek subdivisions.  Why in the world would they locate their stores where their customers reside?  I know..  I know..  it is because they are racist.  It has nothing to do locating near their customer base.

    • DaftPunk says:

      are you a dcotor?

      Not Colorado.  CBME has no record of you.  Why you’d post on COLORADO Pols as a doc eludes me.

      Michigan?  You sound like a more aggressive version of Dr. Kervorkian, what with dancing on Murtha’s grave one day, and now openly hoping for the early deaths of career politicians.

      Do us real doctors a favor and go away.

  7. Steve Harvey says:

    in assuming that people here would focus on their central point: Pay-day lending is a predatory practice, that exploits a weakness rather than provides a useful service.

    Thus, my heroin analogy above. A heroin addict might insist that his dealer is providing a vital service, but there is a general consensus that the “service” exploits an addiction (a weakness), and does harm to the one “served.” We can debate whether people should be protected from themselves, but there’s not a lot of debate over the fact that heroin addiction probably does not, on balance, serve one’s own interests in the long run.

    No, there’s nothing extraordinary about the fact that these “businesspeople” (predators) locate themselves near their “clients” (prey). By the same logic, MD and DP could dismiss a story about child molestors hanging out near schools and playgrounds by arguing, “Well, of course they hang out near schools and playgrounds! I mean, they’re looking for children to molest, right? Where else are they going to hang out?”

    Yeah, but, that kinda misses the point….

    • DaftPunk says:

      …The story isn’t about how much payday loans suck, it’s about where they locate.

      By my analogy, do you think women who can’t get access to abortion from their private doctor have a right to access it?  If they do, shouldn’t Planned Parenthood be easily accesible to them?

      Anti-choice whackadoos make the argument that PP is bent on genocide by this correlation, when they really just don’t like abortion in general for anyone.  They’re argument is weak and so is yours.  You don’t want payday lenders anywhere, but instead you complain about the specific locations where they are.

      If payday lending stores suck, complain about their horrible practices, but putting your business near your prospective clients isn’t evidence of nefarious intent, it’s Capitalism 101.

      • DaftPunk says:

        …I just spelled “their” ast “they’re”

        Hangs head in shame.

      • Steve Harvey says:

        I couldn’t care less if payday lenders lend to people who have tons of money. That is the point. The nefarious intent is due to who their clients are (as in the child molestor analogy), and that is what The Bell was trying to highlight. Since it is a practice which preys on low wage earners who never get ahead of the visious cycle of losing a large portion of their income in order to have it immediately (see heroin analogy), where the predators locate, and who they prey upon, is directly related to what it is that makes them nefarious.

        Since providing counseling on reproductive services isn’t nefarious, locating conveniently where such counseling is in highest demand (due to not having as much access to private doctors) is an actual service, rather than a predatory practice. That’s the difference.

        • DaftPunk says:

          look at it from the opposite point of view.  

          We may see access to abortion as an excercise in freedom and autonomy, but to the other side it’s quite nefarious.  The poor. minority woman does not have the knowledge to seek out adoption agencies or groups who will help support her in raising her child.  Abortion is a quick fix, as she is left to the genocidal pro-aborts who are proponents of eugenics.

          It can be argued that payday lending allows freedom and choices in the marketplace.  It may have negative consequences, but what freedom does not?  As she doesn’t have access to credit counselling or a legitimate bank or credit card she goes to the outlet the market has made available to her.

          Should the payday lending industry be heavily regulated? Yes!

          Should there be incentives to locate traditional credit sources and good banks in low-income neighborhoods? Absolutely.

          Are “free” markets the solution to societal problems?  Hell no!

          But selling a legal product where your customers are is the market at work.  I would bet these neighborhoods have a lot more $1.35/scoop chinese restaurants and pawn shops too, and a dearth of Whole Foods.  Does that make Whole Foods racist?


          • Steve Harvey says:

            Here’s what we agree on:

            1) There’s nothing wrong with services locating where they are needed.

            2) Anti-reproductive rights advocates could consider reproductive services counseling to be predatory behavior directed against those who can be “persuaded” to commit what they consider to be an immoral act.

            3) There are financial services that would be very helpful to low income wage earners, that would be very usefully located where payday lenders are located.

            Here’s what we seem to disagree about:

            1) Whether something is a service or a predatory act is not a completely subjective determination. If one person considers, for instance, teaching math to be predatory, their opinion does not hold equal validity to that of a person who considers teaching math to be a vital service.

            2) Whether something is a service or a predatory act is a crucial determinant in whether locating near the “client base” is benign or malignant.

            I’m happy to agree to disagree with you, on those things that we disagree on.

            • DaftPunk says:

              But would you really be happy allowing 400% interest rate shops so long as they were only in Cherry Hills and Greenwood Village?

              It sounds like you’re more into abolition than zoning.

              • Steve Harvey says:

                who could afford the loss without the same degree of hardship imposed on current clientelle, I would be far less concerned about it.

                Look, as I said in response to someone else, I think the credit industry as a whole is mostly predatory. One of the first and most emphatic lessons my dad ever taught me was not to carry a balance on a credit card (which, if you pay the minimum, leads to paying about three times the price for everything you buy). But I am not in favor of prohibiting the practice.

                Somewhere between the normal use of a credit card by people with an income that will eventually catch up to their debt (not always the case, as we all know), and the exploitation of the poor by predatory lenders, is a line between where individual choice prevails and legal protection against predation prevails. I don’t know exactly where it is, but, for the most part, it doesn’t pass through Cherry Hills.

                • Steve Harvey says:

                  the mere fact that anyone would accept that rate indicates desparation, and probably would lead to financial destitution in any case (eg, a Cherry Hills gambling addict). So, okay, you’re probably right: It’s the predation that counts. The fact that the most vulnerable victims tend to be low wage earners doesn’t mean that they’re the only potential victims, just the easiest ones to find and exploit.

    • Payday loan services can, IMHO, be of use to society; they do not, IMHO, need to charge the exorbitant rates they currently force on their customers.

      We’ve gone through the analysis here in the past; their customers aren’t really any worse at repaying their loans than the average credit card holder.  Therefore, it seems obvious that they don’t need to charge any more than the worst credit card rates.

      • Steve Harvey says:

        I don’t entirely disagree (though, frankly, the credit card industry is predatory as well). I was referring to the payday lending industry as it currently exists, which is less a service provider than a predator exploiting a vulnerable population.

  8. Ray Springfield says:

    36% by rule of 72 doubles every 2 years.

  9. parsingreality says:

    Once upon a time, if you had $25 or $100, whatever the banks required to open a checking account, you got it.

    Now they run a credit check and use a scoring system.  

    As long ago as 1988 I was turned down from opening a basic account with Great Western in CA………as I worked for them.

    Payday lenders are picking up the slack.  Immorally, but meeting a need.

    Part of the solution would be to require banks to open accounts regardless of credit rating.  They can protect themselves with other means.  

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