Limits on simultaneous borrowing. Minimum term restrictions

Minimal term limitations

A standard pay period of 2 weeks is assumed for states that set the minimum term limit in terms of pay periods rather than days. For example, Virginia’s limitation of 2 pay durations is coded as 28 times.

Maximum term restrictions

States without any term that is maximum are coded as having a restriction corresponding to their state with all the greatest appropriate restriction, that is 60 times for Kentucky.

Limitations on simultaneous borrowing

Simultaneous borrowing limitations are divided in to two factors: the restriction on absolute amount of loans, together with limitation for the wide range of loans per lender. Both of these are collapsed into binary variables in regression analysis. These factors make the worthiness 1 in the event that state limits clients to a single loan at the same time, and 0 otherwise. Which means that states customers that are limiting a couple of loans at any given time are believed equal to states without any limitation. This choice had been built in light regarding the known undeniable fact that in states without any restriction it really is uncommon to borrow significantly more than two loans at the same time; consequently, a limitation of two loans is not likely to be binding on numerous clients.

Rollover prohibitions

For states where the rollover restriction is stated in months instead of when you look at the true quantity of renewals, two weeks is known as comparable to 1 renewal. In regression analysis the rollover variable is collapsed in to a binary corresponding to 1 if rollovers are totally forbidden, and 0 if some kind of rollover is permitted (regardless of if it needs the main concept become reduced). Remember that a definition that is alternate considering paydown-only rollovers as equal to rollover prohibitions, yields empirical outcomes much like the outcomes presented into the paper.

Cooling-off durations

Cooling-off durations are stated in times. Offered variability both in the space of cooling-off durations as well as in the conditions under that they are triggered, in regression analysis these are typically collapsed right into a binary adjustable corresponding to 1 in the event that continuing state employs some sort of cooling-off legislation, and 0 otherwise.

Extensive payment choices

Extensive payment choices are excessively variable both in their kind plus in the conditions under that they are triggered. In regression analysis these are typically collapsed into a binary adjustable corresponding to 1 in the event that state employs some sort of extensive payment option, and 0 otherwise.

Records on coding by state


Calculating Ca’s cost limit per $300 is a challenge as the state includes a $300 loan size limit this is certainly inclusive of this charge. Which means that if your lender had been to charge the statuatory maximum of 15% regarding the real face worth for the check, or $45, the key is limited by $255. Lenders will make a loan with $300 principal, however it will have to have no charge. To be able to calculate the per-$300 optimum cost for comparison along with other states We determine the portion fee permitted on $255 then use that percentage to $300. This yields.

The Ohio brief Term Loan Act, supposed to govern lending that is payday sets an APR limit of 28%, effectively making payday financing impossible. But, loan providers have actually circumvented the Act by lending under either the Ohio Small Loan Act or, additionally, the Ohio Mortgage Lending Act. Due to the fact Short Term Loan Act is irrelevent to lending in the state, this coding utilizes values produced from the Mortgage Lending Act.


Tennessee enables at the most two loans simultaneously, and additionally they cannot sum to a sum more than $500. Considering that $500 can also be the dimensions restriction for the loan that is single the buck restriction will bind more highly that the limitation in the amount of simultaneous loans, making the effective loan limit 1. Tennessee has an additional complication for the reason that it’s the only state having a restriction in the absolute quantity of loans per debtor, but no database by which loan providers can look for other outstanding loans. This not enough an enforcement process effortlessly renders the absolute loan restriction moot. Thus, despite the fact that regarding the publications both the absolute and limits that are lender-specific 2, in training We have coded them as “no limitation” and 1, correspondingly.


Washington makes use of a kind of legislation this is certainly unique among states into the information: a limit that is absolute of loans per consumer each year. This legislation many closely resembles a cooling-off duration, for the reason that it can be considered a permanent cooling-off period caused after the 8th loan. That is why i have coded Washington’s cooling-off adjustable as 1, although the legislation is significantly diffent sufficient off their regulation that is cooling-off merit consideration with its very own right.