Payday loans are noted as the fastest and easiest way to borrow some money when your salary is not on time or you have spent your income at the starting of a month and now there is some urgent work for which you need cash. In today’s era, there are more than 23,000 Payday lenders in the USA which are almost double to McDonald’s. Various people in America don’t have any degree, who live on rent, who are divorced or separated and earn not more than $41,000 annually. And become the borrowers of a Payday loan, among whom most of them are youngsters.
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According to the data, only 6% of folks in America use the Payday loan and the greater number among them is the age group of 18 to 26. When you don’t have a sufficient amount for your living then such small financial support which doesn’t need any credit check can become alluring aid to get rid of such situations, mainly in case of youngsters.
It is not amazing that the Payday lenders make use of the mentality of people who are becoming techno-savvy by providing them everything on their mobile phones via various apps. Not only this, but they also allure people through various adds like “Instant Cash without Credit Check” on social networking sites nowadays. Because of this, youth is becoming the target of this industry. This is not all, there are many illegal lenders also whose consequences can get you in trouble.
Folks, who are keen to borrow money through Payday loan frequently is not a very good idea because if you can wait for something and it’s not very urgent then why you want to pay extra for that thing? Due to its extremely high rate of interest, these loans are only favorable for some emergencies. The APR goes for these cash advance is the minimum 300% which can be more also. Young people can’t handle their monthly expenses and debt together which results in the debt trap. According to the Consumer Financial Protection Bureau (CFPB), 90% of Payday loan borrowers are those who usually take loans more than 10 times every year.
Apart from sudden needs, the main reason for borrowing these loans in the US is the cost of living which is increasing day by day. According to the survey of Pew Charitable Trust in 2012, around 70% of people use this money for their regular expenses and only 16% peeps apply for this loan in emergencies. And that is the reason, people of America pay around $4 billion only as of the charges of payday loans. Netizens of the US have forgotten that Payday loans were introduced only to tackle unexpected situations, not for daily use. Now after Trump administration, lenders have their new earmark i.e. Young people who are already under debt.
As compared to other age groups, people age 18-25 are getting witnessed of more financial uncertainty and the main reason is their student loan debt issues. And the people of age 25 to 35 already have a debt of their study loan as the initial debt. As per the report of North-Western Mutual Study, $27,900 is the approximate amount that Generation Y has to refund and Generation Z is in the debt of amount $14,700. It happens the first time that graduated students in America who are in debt of the loan have negative net wealth.
After Trump’s administration, it becomes easier for lenders to maneuver this lending industry. As in 2019, due to the CFBP of administration, many rules were protecting the borrowers from the rate of interest which goes more than 400%. Now there is no shelter for the borrowers only due to this administration. But there is a chance that these rules might change this year. Perhaps, it can be in favor of lenders only or borrowers too. So, just wait and see what will happen.
