About 1 in 5 Houston-area residents used a predatory lending product in the past year, often to cover basic needs.
Predatory lending products such as payday loans, auto title loans and rent-to-own services can carry high fees and unclear terms that trap borrowers in debt. They are most used by lower-income residents who lack access to traditional banking and credit services, especially during times of financial stress.
This study examines how credit access and financial stress relate to predatory lending use, aiming to inform solutions that promote long-term financial security. Data comes from a survey of over 5,000 Harris County residents in November and December 2024. The study builds on prior research from the Kinder Institute that found 2 in 3 residents in the region are financially insecure, with critical gaps in banking access, retirement savings and financial literacy.
Key findings
- About 1 in 5 Houston-area residents had used a predatory lending product in the past year.
- The most commonly used products were payday loans (28%), pawnshop loans (18%), auto title loans (9%) and tax refund advances (5%).
- Nearly 40% of residents who used a predatory lending product used more than one type.
- Higher use was reported by Black (34%) and Hispanic (21%) residents.
- Over half of residents who used predatory lending products said they needed the money to cover basic necessities like food and groceries (57%) and their rent or mortgage (51%).
- Other reasons included regular expenses such as utilities or car payments (47%) and unexpected expenses such as home and/or car repairs or medical costs (40%).
- Those more likely to use predatory lending products included:
- Residents with limited or no access to traditional credit products (e.g., credible loans, credit cards)
- Residents with poor credit scores (i.e., between 300 and 579)
- Residents experiencing difficulty paying for housing
- Residents without at least 3 months' worth of savings to cover living expenses
Suggested citation: Njeh, J. (2026). Use of predatory lending products in the Houston area. Houston, TX: Houston Population Research Center, Kinder Institute for Urban Research, Rice University. DOI: https://doi.org/10.25611/RAER-MV70
