Facts About Payday Loans In The USA That Will Shock You

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Since the introduction of payday loans in the 90's, taking one out has become an increasingly popular choice among mid-tier to low-tier consumers. The idea behind an online payday loan is to behave as a financial product that's readily available to anyone who's in need for a small amount of money. 

Repayments may appear to be expensive, but some consumers fail to realise that they're paying for the convenience that wouldn't be offered to them without the existence of online payday loans. In order for you to better understand online payday loans, here are some facts that you probably didn't know and would probably shock you.

Repeat loans make up almost 75% of total loan volumes

In contrast to popular belief, most online payday loans are taken out from people who have taken one out before. These statistics are acquired from the US alone, which means that it may not apply to other countries such as the UK. Truth be told, this is the result of borrowers being unable to repay their original loan, causing them to take another payday loan out just to finance the previous one. However, avoiding this vicious cycle is as simple as taking out a loan that you can afford, and being financially literate enough to understand the terms and conditions. As baffling as these statistics may be, protecting yourself from the grasps of online payday loans can be really easy.

EDITOR: It is suspected that with rate capping, rollover capping and more emphasis on affordability checking that this figure would be less for the UK but no statistics have been found in regards to this.

Taking out a payday loan is so easy that it's scary

The eligibility requirements for taking out an online payday loan typically involve having a bank account, an income statement, a job, and a identification. There are no checks on your credit scores or your financial status or your past loans from other financial institutions. Approval speeds are shockingly quick and are probably even faster than getting approval for a basic credit card.

Payday loan outlets are more common in the US than McDonalds

There are only 12,400 McDonalds outlets in a sample of 35 random states of the US. Within that sample, there are 23,000 payday loan outlets. On top of that number are even more online payday loan lenders. This means that finding a payday loan lender shouldn't be a problem for anyone regardless of it being online or physical.