Susan Lupton
“The payday lending business model is incredibly inefficient… They have to flip borrowers repeatedly to make any money. If held to a cap, it’s just not going to be a profitable environment for them.”
Susan Lupton of the Center for Responsible Lending said that payday loan companies in North Carolina could not make enough money under the 36% rate cap imposed in 2001…
The North Carolina state legislature allowed payday loan companies to charge more than 36% APR between 1997 and 2001. Lupton said that it brought about an unexpected increase in the number of payday lenders:
“That’s when 1,000 shops came in… The general assembly thought it would be an occasional product offered by check cashers.”
Susan Lupton is a senior policy associate at the Center for Responsible Lending.
Source: Proposal Would Cap Payday Loan Interest (Associated Press)
Professor Sheila C. Bair believes that banks can offer short-term loans more efficiently than payday lenders but choose not to because it would cannibalize the huge profits they make off of bounced check protection.
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