Alternatives to Payday Loan Consolidation

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Before getting into the details of payday loan data It is important to clarify the definition of payday loans and what they are in comparison to other types of short-term loans. The purpose of a payday loan is to help pay for the expenses of living between one pay period and the next one for the borrower, which makes these loans short-term. https://ipass.net/payday-loan-consolidation/

The payday loan amount is typically between $500 and $1,000 dependent on the amount of the borrower’s paycheck and are designed to be paid back from the next paycheck of the borrower typically in two weeks. There is no credit screening necessary to be able to obtain the payday loan. But, lenders who offer payday loans need confirmation of income and employment in addition to an acceptable ID to qualify.

Payday loans are different from other forms of short-term loans like cash advances on credit cards mostly due to the costs involved and the very short repayment times. People who take out payday loans to cover urgent expenses have to pay more than have if they took out an installment loan that has an extended repayment period or a cash advance.

Who is the person who uses payday loans?

Based on the most recent data on payday loans across the United States, short-term payday loans are a popular choice for people of all ages and locations of the country. But, the average person who takes out a loan earns estimated $30,000 annually and almost the majority of these borrowers have difficulty meeting their monthly expenses.

Every year 12 million Americans take advantage of payday loans to deal with cash flow problems from one pay period to the next period, and spend more than $9 billion in charges to cover this. In the average the average payday loan holder is in debt for 5 months out of the year. This is mostly because of short-term loans.

  • The number of payday loans borrowers in a every year is: 12 million
  • The average income of a payday loan creditor: $30,000 annually
  • The percentage of borrowers who are unable to comfortably pay their monthly bills: 58% (this includes those currently receiving government assistance and social security)

What are people using payday Loans for?

Payday loans are designed to to cover unexpected expenses, such as an automobile repair or medical bill that can throw the borrower’s financial circumstances. However 7 out of 10 payday loan applicants can make use of this credit to pay for the expected monthly bills, like automobile payments, utilities or any other debt obligations.

Payday loan statistics reveal the most common applications of payday loans in the following ways:

  • Basic living expenses such as gasoline and food
  • Help with mortgage payments
  • Car loans
  • Payments with credit cards
  • Utilities
  • Financial emergencies

Where Can People Get Payday loans?

Payday loans are made available through payday loan lenders the majority of them are located in brick-and-mortar stores in cities and towns across all across the United States. The most recent statistics on payday loans reveal that payday lenders are in operation in 36 states. However, the proportion of people who use them in each state is different. Some states only have 1 percent of the population using them some states have rates that are higher of 14 percent for residents.

The reason for the difference in the use of payday loans by borrowers in different states is the differences in laws and regulations designed to control the practices of payday loans among short-term lenders. There are also payday loan lenders that operate across the nation. However, payday lenders online tend to be more susceptible to deceiving customers regarding the interest rate, cost for borrowing and payment terms Beware of the buyer.

Here are some of the usage rates and statistics for payday loans in the most well-known states that lend:

  • Louisiana has A 10% loan utilization rate for residents, and the loan limit of $350.
  • Missouri is home to 11% rate of loan usage for residents, and an amount of loan up to $500.
  • Oklahoma has 13% loan usage rate among Oklahomans, and an amount of loan up to $500.
  • Washington has a 11% rate of loan usage for residents, and the loan limit of $700

Beware of Payday Loan Trends that Are Alarming

While payday loans are popular across the countries that offer them, they do have numerous disadvantages that consumers must be aware of. Payday loans are a no-go for consumers due to the high costs and high interest rates being charged. The cost of one payday loan is much greater than alternatives, like cash advances on personal loans or credit cards.

According to the latest data on payday loans, the borrowers are more likely to extend a payday loan rather than pay off the outstanding balance. A rollover is when you take out a loan with new fees to cover the cost for the loan originally. This can lead to a vicious spiral of financial debts for those who are unable to pay it.

Here are some specific payday loan facts which highlight the following common problems:

  • The typical payday loan comes with $520 in charges to borrow $375 at first
  • The typical fee that the payday lender charges is $55 for a 2-week loan
  • The standard payday loan demands an amount of $430 due on the next payday, which equates roughly 36% the borrower’s gross salary
  • About 80% on payday cash loans will be paid in two weeks after the payment an earlier payday loan
  • 75 percent of these loans can be taken by those who previously taken out a payday loan within the past 12 months

Solutions to payday loans

A lot of people who take out payday loans don’t realize they might be eligible for other options that have lower costs and longer time to pay. These options include cash advances from credit cards and individual installment loans, personal lines of credit and personal loans.

Although cash advances from credit cards typically have interest rates of double-digits however, they can be useful in covering smaller, short-term requirements for financing without having a payment obligation.

Personal loans usually have single-digit interest ratesand provide a fixed repayment plan and minimal additional charges for those who qualify.

Personal lines of credit function like credit cards but they might have an interest rate lower than cash advances however, they are more expensive than personal loans.

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