Are you a typical payday loan customer?
In this post I am going to describe the characteristics of a typical loan consumer. If you have landed at credit facts free and you are doing some research about payday loans I encourage you to read on.
You may be someone that uses payday lending regularly or you may be considering taking out a loan. If you use appropriate discipline then the use of a supplementary loan between paydays. Patterns in life can be broken so if you need to use a payday loan do so. But my suggestion would be to use a payday loan only in an extreme emergency.
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The profile of a typical short term loan customer is usually someone that went to high school but has no additional formal education. Typically a payday loan customer will have a small balance in their bank account. They will have few loan alternatives to call on and will have to take a loan because it is necessary.
Usually a payday borrower will have a number of financial commitments and could be overdue with some of these repayments. Many payday loan users a needing a quick fix and they will not think in terms of an annual percentage charged but rather the fee amount.
The fee amount calculation can sound small but when annualised it will often work out to be 200 or 300 percent. If a payday loan is charged out the equivalent of 200 or 300 percent then we would regard that are predatory lending. There are payday loan companies that do operate in a much fairer and more ethical way.
Break the Cycle
If you are a user of payday loans or military payday loans we want to encourage you to think about breaking the cycle of debt. Credit Facts Free is always going to provide tips on personal finance and budgeting. We hope by providing budget plan free tips and information about credit that we can help.
Some families in the world have a poor attitude to money for generations. The good news is that you can choose to break that cycle and by research and planning you can do it.
Budget planner free is our section of this website that provides some tips about where to look for financial planning tools. If you are in a great deal of personal debt it can feel like you a climbing Mt Everest but with small changes a lot can happen.
Payday loans can be useful when you need to pay an emergency bill or debt and do not have cash funds. You must aim to repay that loan as quickly as possible to avoid additional large interest charges though.
Don't Spiral into a pit of debt
There is a lot of evidence that shows many who use payday loan companies become very dependent on these types of loans. If you get caught in a cycle of relying on a payday style loans every few weeks or months you may have trouble breaking the pattern. In that situation consumers will often find themselves paying one loan with another and that can only end badly.
Payday lending is growing in popularity
Evidence shows that short term loans are growing in popularity. Wherever there is a profitable niche market business people will fill it. When financiers can get a large percentage return on their capital a business niche will typically grow. The story is as old as time and all about the haves and the have nots.
When sometime who has money can lend to someone who needs it at a premium they will. Other lenders that offer these services include pawn shop and outlets that cash check for a fee.
The Debt Game
Once you become reliant on short term loans How the cycle works. If you analyse your total net income less bills the percentage will be quite high. If you are use to having a sensible loan plan to fall back on you may never set the right level for your discretionary spending.
Bills must be paid but many consumption items can be done without. The challenge is working out what expenses fall into musts or which ones are in the maybe category.
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