Payday loans are loans of a small amount, taken for a short duration
of time. Payday loans are generally meant to be paid off on the next payday.
Payday lenders loan out thousands of dollars every week to people who
are in dire need of money. The Community Financial Service Association
of America, payday loan cash advance industry extends to about $25 billion.
Payday lending is often regarded as something predatory and it is of
the common belief that payday customers are being used as fodder by the
money hungry payday lenders. However, the various researches undertaken
throughout the years contradict the view that payday loans are predatory
and the borrower is always being preyed upon. In fact, recent studies
have shown borrowers preferring payday loans to other loan alternatives.
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The huge Annual Percentage Rate (APR), in the range of 3.91% and higher
often makes it intriguing as to the people who opt for these loans. But
studies conducted throughout the States show that people from all walks
of life consider payday loan cash advance as an affordable option to meet
their financial needs. The US Census report of 2000 show that 22% of the
surveyed payday loan borrowers hold a bachelor's degree from college.
More than two-thirds of the people surveyed reported an annual income
of a minimum $25,555 and has a savings account. Also, 51% of the surveyed
population had a retirement savings plan.
Viewing the industry statement, it seems that the payday cash advance
customer has more than average level of education than the general US
population. A typical payday loan customer is between 25 to 40 years of
age and has an annual income between $25,000 and $50,000. Also people
from all walks of life, including teachers, civil servants and corporate
employees considers payday loan as an efficient solution to the short
term financial emergencies.
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