Payday Lenders in the USA are celebrating to say the least! Lenders reports the results of research carried out by Consumer Focus, which confirms that the payday loan market in the US is growing right now, and is expected to grow by 40-45% in the future.
The research that threw more light on payday lending in the USA, reported that in 2020 people in the USA borrowed $1.2 billion from payday lenders, and that there were 1.2 million active payday loan customers last year. Around 60% of the borrowers are unmarried or cohabiting, and around 55% or the borrowers are under the age of 35. The average loan amount borrowed is $294, and each borrower had three outstanding loans last year. There were a total of 4.1 million outstanding loans in 2019.
The payday loan industry had an income of $242 million in 2019, which is only 20% of the total loan amount lent. It was found that borrowers were mostly young adults with an income of less than $25,000, although they had a fair credit history. Most borrowers did not have children. Borrowers said that they found the payday loan approach more straightforward, and direct, to solve their temporary financial problems, and they had borrowed only when they were in substantial debt.
Responsible payday lenders inform the consumers that payday loans are only to solve temporary financial needs, and that they should consult a debt consolidation agency, if they are in constant debt, or are facing long-term financial problems. There have been cases of people getting into a cycle of debt due to payday loans, but while genuine lenders follow a responsible lending policy, people should also borrow responsibly. Borrowers should also research more about the different loan products available online. Some payday lenders provide flexible repayments, while others provide roll-overs.