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Last reports saying that there are more cash advance lenders than fast food restaurants like McDonald’s in the United States. So it’s possible to make a conclusion that consumers need fast cash more than fast food. Cash advance stores provide customers with financial assistance between pay days and they exist on a lending market for already 25 years. And today there are around 25000 payday loan lenders across the US while McDonald’s has “only” 15000 stores.
By the way, learn 6 ways to save money on fast food.
Loans for Emergency Occasions
Payday loans are in demand among people who can’t use traditional lending products. They are available for consumers with damaged credit and for those who haven’t built any credit yet. Low income customers also use this service because they find themselves in need of borrowing money quite often.
Loans till payday are intended for emergency use, for example when unexpected financial problem arise a person can get some money in advance and repay the loan on payday. But many people get into the debt cycle because payday lenders charge high interest rates for their service.
So after paying down one expensive loan a consumer often understands that there’s not enough money left to stay afloat till next payday and applies for another payday loan.
Despite recent progress of American economic growth, many Americans still live from paycheck to paycheck and every unexpected money issue makes them very vulnerable. People who have low income usually plan their expenses carefully and they don’t have spare money to deal with emergencies. As the recent survey shows, only half of Americans keep an emergency fund.
Tendency of Not Saving Money
According recent statistics almost third part of Americans doesn’t have emergency funds and savings. And more than 40% of people say that their goal is just to cover expenses and pay bills on time. Today many consumers don’t really care about their financial future and they don’t make investments and don’t have savings. That’s why they borrow money from friends or family members in case financial crisis arises suddenly.
Consumer Financial Protection Bureau regulates huge payday loan industry and tries to prevent low income customers from using high interest rate lending products and getting to the debt circle. Typical person using short-term loans online has annual income around $20000 and pays around $500 for using this service.
According to CFPB, almost half payday loan store consumers used the service 10 times but also there are those who have applied for payday loans more than 20 times. The median amount people borrow is $300 for two weeks.
Payday loans can help consumers to deal with financial emergencies and many consumers appreciate that with a help of this service it’s possible to get financial assistance easily and quickly. Some people don’t want to apply to relatives or friends and use payday lenders to get some money when they need it.
But on the other hand, advance loans can be harmful if using them becomes a part of a lifestyle. These credit products are legal in 36 states so before making a decision to take out one it’s necessary to make sure that they are also legal in your state.