There have been many debates about these loans, and we can find both positive and negative testimonials about them. So, how come payday loans evoke such various emotions? Let’s try to figure it out.
First of all, we should understand that people are very sensitive to losing money and even spending it on obtaining some necessary stuff can raise negative emotions. Moreover, it’s always painful to give back the money even if you owe it to a friend. Thus, people rarely praise the companies that lend them some money, especially when they have to pay additional interests.
However, people keep returning to payday loans or other short-term loans that are accompanied by comparatively higher interest rates. Why? One of the reasons is, of course, compulsiveness. A strong desire to get something you want may be a reason for hasty decisions.
On the other hand, most of us have come across a type of emergency cost when we either cover it or wait for others to come. “Evil never comes alone” is applicable in these situations. In such cases, access to some quick cash can be genuinely “life-saving,” even with additional interests.
Random Payday Loan Statistics 2020
To get a better understanding of how payday loans work in the US, we have collected some statistics and random facts.
- Payday loans are available in 36 states. The other states either prohibit them or cap interests at a low rate, often making it impossible for lenders to operate.
- The average annual percentage rate is 391%.
- Around 70 % of the borrower use these loans for regular expenses rather than rising costs.
- The average annual income of borrowers is $30,000.
- 12 million Americans take out payday loans each year, spending $9 billion on loan fees.
- 3/4 of payday loans go to those who take out 11 or more of the loans every year.
- The borrowers take 8 payday loans a year on average.
Who Takes Payday Loans?
- Around 85% of borrowers do not have a four-year college degree.
- About 70 % of the payday loan customers have an annual income below $40,000.
- Women are more likely to take payday loans than men.
- More than half of the borrowers are white.
- Around 52% of the borrowers fall in the 22-45 age category.
- Renters are twice more likely to take payday loans than how owners.
- 13% of people who are separated or divorced have used payday loans at least once in their lifetimes, compared to 7% of singles.