About 60 percent of them paid off the loan within 14 days of the date they’d predicted
RONALD MANN: I have a general idea that people that are really tight for money know a lot more where their next dollar is coming from and going than the people that are not particularly tight for money. So, I generally think that the kinds of people that borrow from payday lenders have a much better idea of how their finances are going to go for the next two or three months because it’s really a crucial item for them that they worry about every day. So that’s what I set out to test.
First, Mann wanted to gauge borrowers’ expectations – how long they thought it would take them to pay back a payday loan. So he designed a survey that was given out to borrowers in a few dozen payday loan shops across five states.
MANN: And so, if you walked up to the counter and asked for a loan, they would hand you this sheet of paper and say, “If you’ll fill out this survey for us, we’ll give you $15 to $25,” I forget which one it was. And then I get the surveys sent to me and I can look at them.
Later on, the payday lenders gave Mann the data that showed how long it actually took those exact customers to pay off their loans
MANN: And that surprised me.Continue reading “About 60 percent of them paid off the loan within 14 days of the date they’d predicted”