Borrow $500 from a payday loan?
New research from Pew Charitable Trusts says Nevadans are on average charged 602% and pay $924 for a short-term loan spread over four months.
Only in Idaho do payday borrowers pay more, according to the research.
Nevada has struggled to pass legislation to cap high percentage rates. In 2019, legislation proposing to cap interest rates at 36% went unheard.
That same year, lawmakers voted to create a statewide database to track short-term payday loans. Lawmakers said the data collected could help better monitor or regulate the industry.
After being pushed back by industry and dealing with issues resulting from the pandemic, the database, which was due to be operational in July 2020, was operational in January.
The statewide regulations, approved by lawmakers, included provisions to prevent customers from taking out multiple loans that exceeded 25% of their income.
Four states – Colorado, Hawaii, Ohio and Virginia – have passed reforms to short-term lending practices since 2010.
The average annual percentage rate in these states ranges from 114% in Colorado to 144% in Hawaii. The cost of a $500 short-term loan in these states ranges between $110 and $159 over four months.
In Idaho, which resembles Nevada in having few loan guarantees according to research, average rates are 652% and could cost people $1,000 to take out an installment loan.
Pew recommended that “the 18 states with no payday loans continue to prohibit high-cost loans and that other states choose to follow the example of these states or adopt comprehensive reforms like those in Colorado, Hawaii, Ohio and Virginia”.
“The experiences of these four states provide a clear blueprint for policymakers seeking to protect consumers and enable access to low-cost credit,” the report notes. “And their approaches share four key ingredients: fair prices that are viable for lenders and borrowers, affordable payments, reasonable repayment terms, and widespread access to safer credit.”