Cash Advance Loans - Survey Shows Customers are Satisfied
The payday loan industry is beside themselves because of a recent study that shows that a lot of of their clients would gladly sign up for the high interest lending products once again. In fact, most people polled in the study said they were happy with their experience. This might astonish individuals who consider these kinds of loans, with interest rates that can be greater than four hundred percent annually, as deceptive lending. On the other hand, the cash advance loan business performed the survey on their own, so possibly the final results aren't so astonishing .
The cash advance lending industry is in the business of providing temporary loans to customers who require several hundred dollars to pay their bills until they receive their next payroll check. The borrower obtains the loan for two weeks and provides the loan provider a postdated bank check for the amount of the loan plus interest. In two weeks, the customer will pay back the borrowed funds in cash, or alternately, the lender will deposit the customer's postdated check. Although the typical loan ranges from $100-$1500, the rates of interest add on anywhere from $10 to $20 for every $100 borrowed. When viewed as a yearly interest rate, the interest paid on a two week loan can amount to 400% or more each year.
Individuals who are opposed to cash advance loan shops, and there are a lot of of them, say that the lenders take advantage of poor individuals who have very few choices for loans and represent the portion of contemporary society that is least able to pay these kinds of fees for loans.
The payday loan business disagrees. The Community Financial Services Association of America, a cash advance loan business marketing organization, provides differing information on its Web site:
The group says that their common customer is not poor, but actually earns $25,000-$50,000 each year, that more than 40% own their own homes and that a majority of their customers have some college schooling. They continue to state that this demonstrates that their typical borrower isn't a part of the operating poor but is really a member of the middle class.
On the other hand, a $25,000 salary is not particularly rich, and more Americans own their homes than at any time in history. Among individuals with a college degree, $25,000 might be considered to be less than an entry level wage. In reality, the average payday loan customer is less well-heeled financially than the majority of individuals, who have other opportunities available to them for borrowing money, such as credit card advances and bank loans, each of which have substantially lower rates of interest than quick cash loans.
The industry does observe accurately that for small, temporary loans that are repaid in a timely manner, the fees charged by payday loan stores are lower than the penalties that banking institutions demand for bounced checks or overdrafted accounts. Then again, the service fees assessed by banks for overdrawn accounts aren't fees or interest but are, in reality, penalties meant to dissuade the behavior.
Without a doubt, a lot of individuals who do business with quick cash loan stores are content with their encounters. One shouldn't draw the conclusion that they're happy just because they keep returning, however. If your only option for borrowing money is a store that provides it at 400% a year, you will return each and every time you require money.
You will discover occasions when cash advance loans appear sensible, but they need to be used solely for the infrequent emergency situation rather than for frequent cash shortages. If you find yourself in a financial bind once, a payday loan may help you. Be certain to check around to make sure you discover the ideal attainable rate before applying.
About the Author
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Perry Monkhouse is an online marketer with a decade of expertise. He has published articles on many different topics of interest.