7 Interesting Facts About Payday Loans
Payday loans have been long considered an easy and convenient way to get a bit of spare cash that you need to make it until the next payday. But what do we actually know about a service that we use on a regular basis?
1. It’s a young industry
The first companies engaged in payday loan issuing emerged about 20 years ago, back in 90’s. To have something to compare it with, banks around the world started issuing credits at the dawn of 1940’s, or more than 70 years ago.
2. Massive coverage
Over just two decades the payday loan industry managed to conquer a staggering amount of 35 states nationwide. According to the statistics, about 30% of the total US population use payday loans once in a while. Around 70% of these people use them on a monthly basis.
3. Payday loans globally
Currently, payday loan industry, as well as its counterparts, are present in literally half of the planet’s countries. From the US and Canada to Germany and Poland, and from Russia to Japan.
At the moment payday loan services — at times dubbed as ‘fast loans’, ‘instant loans’, or just ‘quick money’ — are highly welcomed by the Greek, Italians, Spanish, and British. Budget and job cuts over there are claimed to have left the national economy in a most dismal state.
Stats show that about 10 mln loans were taken out in 2010 and 2011 in the UK alone, which is a pretty impressive number for a country with paltry 45 mln of population.
4. Community and reasons
In shady growth policies of a great many of payday loan businesses it is openly advocated that the majority of offices should be clustered around low-middle-income minority neighborhoods.
As a rule, residents of such neighborhoods earn less than $2,000 per month and are more prone to getting for short-term loans once or twice a month.
5. It’s a no-brainer
For many, another recuperative grasp of financial resources is surely worth the 15-minute wait: that’s the average amount of time one needs to spend to hand in their loan application and receive the money.
6. Payday loans vs fastfood
The most omnipresent fast food chain in the world, McDonald’s, seems to have been outnumbered by the instant loan establishments in its homeland.
There are 35 states where payday loan industry is not yet banned, and in 29 of them there are two instant loan offices for each McDonald’s — just 12,000 catering venues against 24,000 loan offices.
7. No installments, full loan amount due at once
On the average the loan amount taken out in the United States seldom exceeds $300. With a 50% to 70% interest rate on each loan, a borrower will need to pay gob-smacking $150 more.
It might seem that the ‘no instalments’ practice promoted by the payday loan issuing agencies would scare off those in need of a quick cash support. However, over the last decade the industry popularity has only been gathering momentum and it is probably to see many more ups and downs before it finally replaces conventional credit card loans.