Payday loans are most suitable when dealing with financial emergencies. When unforeseen bills arrive, it is easy to arrange such loan remotely, from the comfort of your home. All you need is Internet access, a bank account and identity information, which is verified through credit bureaus and alternative public records. So, what kind of people resort to payday lending most frequently?
Every year, roughly 12 million US citizens take out such loans. These are usually people with lower income, unable to cover emergency costs like medical bills. This is because payday loan typically require no collateral. Americans with little or no credit history, such as recent immigrants, are more likely to secure a payday alternative rather than a long-term borrowing option. Banks are inclined to reject such applicants right away, denying them a chance to improve their lives in difficult circumstances. For certain payday lenders, even bad credit history is no obstacle for approval. This makes payday loans an obvious choice for many honest working citizens struggling to make ends meet.
According to recent studies, the group most likely to use payday lending includes urban residents aged 25-49. These people are active internet users and tend to take advantage of online borrowing. In terms of household income, families earning less than $40,000 per year (on average, between $15,000 and $25,000) are nearly three times more likely to apply than those with higher incomes. Geographical distribution is largely determined by local legislation, as payday loans are unavailable in some US states.
Naturally, not all borrowers use loaned money to cope with unexpected costs. In conditions of an ongoing cash shortage, for instance, they may cover recurring expenses like credit card bills. Such users often use rollovers, extending the term of their loan and letting fees accumulate. Obviously, such constant lack of money suggests an urgent need for sensible budgeting and improved employment conditions, in addition to borrowed funds. It is essential to carefully consider the contents of the agreement and assess your ability to provide timely repayment. When used wisely, a payday loan is exactly what it is meant to be – a quick and easy fix for temporary monetary troubles.
Hence, for individuals faced with financial difficulties, payday lending is a convenient and quick source of cash. These loans are often approved for Americans rejected by more conservative banking institutions. Whatever your income or social standing, payday loans may be an attractive short-term option, which is easily accessible thanks to the power of the internet.