Reality Check: Legislator Says People Will Turn to Prostitution, Drug Dealing Without Payday Loans

RHETORIC: Arizona State Senator Said People Will Turn to Prostitution or Drug Dealing If They Can’t Obtain Payday Loans

State Senator John Kavanagh Defended Legislation to Bring Payday-Style Loans Back to Arizona Saying Without Them People Will Turn to Prostitution and Drug Dealing.

“It’s giving people who have no choice and are desperate an option,” said Sen. Kavanagh. Kavanagh says Flex loans are meant to be bridge loans. “And what is the alternative of not getting the car fixed and losing your job? Going to a loan shark and having your legs broken when you don’t pay selling drugs, going into prostitution. This is an option, and it helps a lot of people,” said Kavanagh. [Fox 10 Phoenix: “Bill Introduced to Bring Back Payday-style Loans,” 3/23/16]

REALITY: 81% of Payday Loan Borrowers Said They Would Simply Cut Back Expenses If Payday Loans Weren’t an Option

Pew Study: 81% Of Payday Borrowers Say They Would Cut Back On Expenses If Payday Loans Were Unavailable.

“Even though most borrowers use payday loans for recurring expenses, rather than for emergencies, survey respondents indicated they would use a variety of options to deal with those needs if payday loans were no longer available. In general, borrowers are more likely to choose options—such as adjusting their budgets, delaying bills, selling or pawning personal items, or borrowing from family or friends—that do not connect them to a formal institution. Eighty-one percent of payday borrowers say they would cut back on expenses if payday loans were unavailable.” [Pew Charitable Trusts, 7/2012]

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