Payday lenders provided $30.3 billion in loans to consumers in 2009 via their stores and an additional $8.2 billion in payday loans online, generating over $10 billion in profits. But many of those profits came from the social security checks of senior citizens who are struggling to repay the loans.
On July 2, a 74-year-old Dallas widow named Yvonne Sands received her monthly Social Security check of $1,360. Shortly after 7:30 a.m., she withdrew money from the bank and drove off to renew four payday loans with annual percentage rates of about 250 percent to more than 300 percent.
Paying over $4,200 in fees on four loans since last year, 74 year old Yvonne Sands cannot afford to repay any of the loans completely and many of her everyday life needs are going unmet. Sands is not alone, many senior citizens in Texas are being financially devoured by the payday lending industry which is barely regulated in Texas. While other borrowers are protected from usurious lending practices, payday loan borrowers have been left to suffer at the hands of an industry that preys on its customer's desperateness and inability to pay. A matter of fact, studies have shown that borrowers who use payday loans are more likely to miss a mortgage payment, fall behind on their credit card bills and to eventually end up filing bankruptcy. Payday loans often exacerbate the very problems that they claim to fix especially for the vulnerable populations such as the elderly. Because of this fact, many legislators are proposing that payday lenders come under stricter regulations that will better protect consumers.