Payday loans can be extremely helpful when you need to quickly raise cash for unexpected expenses or late bills. Payday loans have been around for a long time, but do you really know what they are? These payday loan facts might just surprise you.
The Average Payday Loan Borrower
It is estimated that more than 12 million Americans use payday loans, and they access such loans more than 8 times on a yearly basis. It is a vicious cycle where you are paying more interest and fees than the original loan amount. These loans can be taken to fill various living expenses between paychecks.
The Annual Percentage of Individual Consuming The Payday Loan is 400% Higher
The average term for these payday loans is two weeks, and the finances charged can range anywhere from 390% to literally thousands with harsh penalty fees.
Payday Loan Users are more likely to go Bankrupt
Most of the payday loan users are taken up by people with low to moderate income. The DAS found that people who take up payday loans are often someone who file for bankruptcy sooner or later.
80% of the Payday Loans are Rolled over or Renewed
Most times, these payday loans are rolled over or renewed within 14 days. There is a majority of people who borrow money and take up way more expenses than the total amount of money. Also, only 15% of people are willing to repay debts without re-borrowing the expenses in more than the 14 day period.
More than 36% APR cap on Loans Which Can be Made to Military Services Members and Their Families
This is due to the fact that 17% of military personnel use payday loans. This is a report made by The Center for Responsible Lending, but most of them have capped annual interest rates by up to 36% which include fees and charges. This prohibits the lender from securing the loans with personal checks or debits.
The Average Payday Loan Ranges from $350 to $500
The average payday loan that is asked for is less than what one might expect. There are few states which have capped the loan principles at more than $500. The real culprit here is the cycle as well as fixed fees and high rates of interest.
The Payday Loan Trap
This payday loan trap is a phenomenon that occurs due to the insanely high fees and interest which need to be paid. It quickly becomes a vicious cycle in which most people cannot get out of, as each month their accrued interest exceeds the amount they can pay. Many wind up renewing their loans and continue to increase their fee which will further push you into the deep, robbing you of financial security.