A story on National Public Radio in 2010 looked at the payday loan industry and the markets it serves. The conclusion of the story surprised many: traditional banks and credit card lenders are missing the mark on how to serve a growing segment of the American consumer public whose credit ratings are poor. Working people with families to feed and households to maintain need a line of credit; they are increasingly finding it through cash advances on paychecks.
There is good news and bad news in this. First, the bad news: market forces, including and especially unemployment, have turned two-earner families into one-earner (or worse) families. This then means a single paycheck is stretched thin, covering what two incomes used to. Consumer spending figures confirm that across the board, Americans have learned to cut back due to these circumstances. But when the margin for error is almost non-existent, an emergency expense (medical, auto repair, etc.) rises up, that household budget falls into negative numbers pretty quickly.
The good news is that a robust payday loan industry has risen up to serve the need. Not viewed kindly by all sectors, at least you can read the terms of the quick cash advance loans online before transacting such a loan (unlike much of the chicanery of the home mortgage and credit card industries of the past several years).
Is it good that people have to find these alternative means of credit? Are cash advances a sign of a devolving economy?
We’ll go with the NPR analysis: that individuals and families who borrow from their next paycheck are doing their best to be responsible to their obligations. Also, people who use cash advances are avoiding the unsavory alternative, loan sharks.
Anyone shopping around the Internet for an online payday loan might look at The Payday Place, an aggregator that matches borrowers with lenders who provide the loan terms that best fit the borrower.
3 hours ago