It has been assumed that payday loan stores have a specific business target: low-income neighborhoods, minority communities, and other at-risk groups.
The debt cycle often created by payday loans for those already in financial difficulty has been a concern, but so far no one has defined what that looks like in Clark County. Justin Gardner, founder and CEO of Las Vegas-based Innovative Research and Analysis LLC, decided to take a closer look.
“Payday lenders surround much of the East Valley and the Paradise region,” said Gardner, a doctoral candidate in the UNLV School of Public Policy and Leadership. “Although there are some on the outskirts of these areas, the majority of them are in the connection areas of the communication routes where there is higher traffic income. “
Based on his research and using the website samedaypayday.com/Nevada-Payday-LoanGardner found that the majority of payday loan stores tend to correspond to areas that have higher percentages of low-income residents.
89101 has most county payday loan stores
Of Clark County’s 443 stores, the majority of payday loan stores – 47 – are clustered around zip code 89101. Zip codes 89121 and 89104 follow with 28 storefronts each, and 89109 and 89102 have 25 each, according to Gardner.
“Like any business, payday lenders want to be located close to their customers and potential customers,” said Dr. Stephen Miller, director of the Center for Business and Economic Research at UNLV. “They know that the people who use these loans probably can’t qualify for other types of loans because they don’t have a lot of savings, so they go to neighborhoods where that niche market is needed. “
In 89101, 17.7 percent of the population was on the poverty line, according to US Census data. From a literature perspective, people using payday loans earn between $ 20,000 and $ 50,000, or less, per year, according to Gardner.
“If we look at the data, we see that there are 10 out of 47 zip codes that have more than half of all storefronts (Las Vegas Valley),” he said.
According to his research, there are 375 payday loan stores in Las Vegas, 47 in Henderson, 19 in North Las Vegas, one in Boulder City, and one at Nellis Air Force Base.
Most servicemen who get loans earn between $ 30,000 and $ 50,000
There are 14 more clustered around zip codes 89156 and 89115 near Nellis AFB, which is why Gardner is also closely monitoring the impact of payday loans on veterans and serving military personnel.
“The most at-risk group of military personnel are in the E-4 and E-9 ranks,” Gardner said. “They are a bit older in their careers and are newly married or have a family or have children.”
In dollar terms, the E-4 and E-9 military earn between $ 30,000 and $ 50,000, he said. Members of the Air Force typically achieve grade E-4 after 18 to 22 months of service and E-9 after 14 to 22 years.
According to Gardner’s research, who surveyed 376 student and non-student Nevada veterans in 2014, 56% cited unexpected expenses as the # 1 reason for using payday loans; 46 percent mentioned having difficulty paying their monthly bills; 34 percent mentioned difficulty paying their debts; and 15 percent cited the need for additional money for school supplies.
About 15 percent mentioned the need for additional money for recreation (entertainment or travel); 13 percent cited the need for extra money for seasonal or holiday gifts; and 12 percent cited a medical emergency.
Additionally, Gardner found that 79.3 percent of veterans using payday loans in Nevada were from Clark County, and more than half have used payday loans since leaving active duty. Half also walked to the front of a payday loan store, meaning they could not afford transportation.
The 2007 law caps the interest rate on military loans
In the 1990s, the US military began to notice a problem. Many soldiers had a problem with their security clearances. The military discovered a large number were due to defaults, Gardner said.
As a result, the Military Lending Act was created in 2007. It caps the maximum interest rate for military payday loans at 36%. The 2007 version of the law was a response to a US Department of Defense report that found about 17% of military personnel using payday loans.
As this type of legislation tackles the problem head-on, Gardner said the military could get used to a capped interest rate, in addition to receiving basic housing and living assistance. The problem begins when they transition to civilian life and lose those benefits.
He said that is when many turn to payday loans.
Part of the problem is the lack of financial education, according to Kevin Schmidt, UNLV graduate and former budget and financial analyst at Nellis AFB. As the Defense Department offers a program known as the Transition Assistance Program, which examines financial literacy, there comes a time when it becomes so repetitive that the military can start to disconnect, Schmidt said. .
“After two weeks of briefing, everything is going through their heads,” he said. “Suddenly they fall into a situation where they don’t know what to do. They can buy a car and have a sudden expense, and now they can’t afford to pay for the car, so they’re looking for other options.
“You just have to walk through the door of Nellis Air Force Base and you will find a lot of shoddy payday loan shops and car dealerships.”
The Air Force offers a one-time Falcon loan per enrollment of up to $ 750 interest-free.
“The main reason so many youth and enlisted personnel are being kicked out of the Air Force is not bad behavior; it’s for financial reasons, ”Schmidt said. “They go into debt so they’re susceptible to blackmail and end up losing their security clearance and can’t do their jobs.”
“What will the future look like if this continues? Gardner asked. “To what extent will this reduce people’s access to higher education opportunities, better jobs and moving up the socio-economic ladder?” If this continues, it will just create a ceiling and people will not be able to go into debt. “
For more information on Gardner’s work, visit innov8reanalysis.com Where vpliresearch.org.
This is the fifth story in a series on the payday loan industry in Las Vegas. To read more stories from the series, visit viewnews.com.
To reach North View reporter Sandy Lopez, email [email protected] or call 702-383-4686. Find her on Twitter: @JournalismSandy.
