Five Percent Payment Cap in Payday Lending Found to Have No Correlation with Decreasing Default

    CLEARWATER, FL, February 19, 2015 /24-7PressRelease/ -- Researchers at nonPrime101.com release a study that found no existing correlation between a five percent payment cap and the likelihood of default in payday lending.

The report, Measures of Reduced Form Relationship Between the Payment-to-Income Ratio and Default Probability, was written by Peter Toth who analyzed 87 million loans that were taken out during a five year period.

"Mr. Toth used three separate concepts to define default, analyzed payment-to-income ratio, and found that there is little to no correlation, meaning a five percent payment cap just wouldn't work and could potentially result in more harm than good," said Tim Ranney, president and CEO of Clarity Services, Inc.

The five percent payment cap rule, which would limit payday loan payments to five percent of a consumer's gross income, is widely speculated to be of interest to regulators who are drafting proposals expected this year to regulate the payday lending industry.

The report, Measures of Reduced Form Relationships Between the Payment-to-Income Ratio and Default Probability, is available now. To read the report, visit nonprime101.com.

About nonPrime101.com
nonPrime101.com provides research studies and articles about non-prime consumer behavior to help the public and researchers better understand them. The rate of non-prime consumers, which include thin-file, no-file, and prior prime consumers, continues to rapidly grow and nonPrime101.com provides unbiased and empirical studies that show the credit usage behaviors, activities, and needs of subprime consumers as a whole. For more information, visit nonprime101.com.

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