RICHMOND, Va. (AP) — Nearly 10 percent of Virginia households have used short-term, high-interest payday, pawnshop and auto-title loans to make ends meet.
A study by the University of Virginia's Weldon Cooper Center for Public Service released Tuesday shows that more than 275,000 financially struggling families in Virginia have turned to alternative financial-service providers to pay for basic needs such as food, housing and transportation. They also are using the high-cost loans to pay for unexpected expenses stemming from job losses, car repairs and medical bills.
A previous Cooper Center study showed that nearly 25 percent of Virginia households don't earn enough money to meet their basic needs, and about 28 percent lack cash savings, stocks or other financial assets to cover short-term emergency expenses. Such low-income families often turn to such alternative loans, which further erode their financial security, study author Rebecca Tippett said.
"These alternative financial services target the working poor, those working but not making ends meet," Tippett said. "When these products undermine the ability to build financial security for themselves, we all bear the cost of that."
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