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Cost of Offering Payday Loans

Ernst & Young Examines Cost of Offering Payday Loans; Finds it Costs $13.89 to Offer a $100 Payday Advance

A September 2009 independent study by Ernst & Young analyzed financial information of 2,687 payday lending 27 percent of multiline industry locations.

Full results of the study
Review all study highlights (PDF)

Using the financial data collected, Ernst & Young’s analysis yielded the following results (all numbers are on a pre-tax basis):

  • Average fee revenue equaled $15.26 per $100 payday advance loan.

  • Average cost equaled $13.89 per $100 payday advance.

  • The cost per $100 loan includes a bad debt cost of $3.74 and operating costs of $9.41. The remainder of the costs reflects the cost of loan capital and supplementary capital.

  • On a pre-tax basis, the average profit equaled $1.37 per $100 loan issued. On an average payday advance of $379, providers realize an average pretax profit of $5.22.

  • The payday advance product is a core service line among the surveyed locations and it generated approximately 51 percent of their total revenue.

Connecting With Our Communities

Managing household finances can be a daunting task. However, by using solid budgeting and savings techniques, you can accomplish major financial goals. In the Customer Resource Center, CFSA offers a variety of payday advance resources that support and encourage responsible lending practices, and highlight the vital role of our members’ stores in neighborhoods near you.


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Here you will find an aggregate of industry research, comprehensive data, and benchmarking tools from the short-term lending industry. They cover all payday advance business areas – consumer demographics, media hits, the latest policy initiatives, among others. Click here to access to the partner's resource library.

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CFSA works at the federal, state, and local levels educate legislators and regulators about the role of payday advances in the broader financial services arena. This section provides resources for policymakers who believe in access to credit, want to preserve financial options and ensure balanced, substantive consumer protections. Click here to enter the Policymaker Resource Library.