The Phenomenon of Repeat Payday Loan Borrowing in the United States: Assessing Risk and Protective Factors among the Financially Vulnerable

Abstract Payday lenders provide high-cost short-term loans to those who have limited access to traditional financial institutions. Although an overwhelming majority of payday loan customers are repeat borrowers, studies examining the phenomenon of repeat borrowing is scant. Our study aimed to assess risk and protective factors among repeat payday loan borrowers. Using Bankruptcy filers' data obtained through the Public Access to Court Electronic Records database of the United States Bankruptcy Court of a Southern district, we conducted a multinomial logistic regression analysis to compare one-time and repeat borrowers with non-borrowers (N = 453). Findings revealed that medical debt and the number of children are associated with an increased risk of repeat borrowing. Homeownership is associated with a decreased risk of both one-time and repeat borrowing. In contrast, student loans are associated with an increased risk of one-time borrowing. Implications for social work practice, policy, research, and education to engage with financially vulnerable households, build assets and financial capability, and address risk and protective factors of alternative financial services such as repeat payday loan borrowing toward achieving socio-economic justice goals are discussed. This study focuses on risk and protective factors of repeat payday loan borrowing in the USA. Study findings reveal that, among bankruptcy filers in the Southern US district, those with medical debt and more children respectively are at increased risk for repeat borrowing of payday loans, whereas homeowners are at decreased risk of repeat borrowing. Further, student loans also predict one-time borrowing, but not repeat borrowing of alternate financial services, such as payday loans.