High-Interest Loans and Class : Do Payday and Title Loans Really Serve the Middle Class?

This symposium article addresses the question of whether payday and title lenders serve primarily the working poor, as some critics claim, or the middle class, as the payday and title loan industries claim. This article starts by discussing how and why lenders claim to serve the middle class. It then describes how scholars define the middle class and the typical indicia of middle class America. The paper then summarizes the demographic data gathered to date on payday and title loan customers, focusing on income and home ownership rates, and concluding that these data refute the middle class myth. The article also briefly discusses how geographic studies bear on the questions of class and payday and title loans. Next, this article describes the methodology and results of our own study of payday demographics, which analyzes data from the Bankruptcy Court for the District of New Mexico from 2007-2011. This article ends with the results of this modest study, which conclude that bankruptcy debtors who list payday loans are far less likely to own their own homes and overall, have lower incomes than bankruptcy debtors who do not list payday loans. It also concludes that the bankruptcy debtors in the sample who also own homes did not turn to payday loans in higher numbers after the 2008 crisis