When unrealistic expectations and desperation drive a consumer to take out a cash advance, they may be turning to the same source to pay off their loan instead of using it as a temporary way to make ends meet. Reports by The Pew Charitable Trusts non-profit organization are looking to understand the effects, often devastating, that the payday loan industry can have on American consumers.
The average cash advance loan is around $375 and has approximately $55 in fees attached. Although individual states are in charge of regulating interest rates and fees for lenders, consumers pay proportionality larger amounts for borrowing on small-dollar loans, in comparison to longer term personal loans through a bank or credit union.
Short-term lending is great for situations where a person needs cash in a hurry, doesn't have an upstanding credit score, or won't qualify with a traditional lending institution. The problem, though, is found in the ease of obtaining these types of loans. Pew found that 58% of borrower's are already having a hard time meeting their monthly financial obligations and are turning to cash advance loans to deal with persistent cash shortfalls, temporary cash emergencies or unexpected costs.
While these short-term loans are expected to be paid back with the borrower's next paycheck, it is being found that the average length of time it takes most people to pay off their cash advance or payday loan is about five months. This is causing a great deal of frustration and dismay for consumers turning to this type of lending.read more
The average cash advance loan is around $375 and has approximately $55 in fees attached. Although individual states are in charge of regulating interest rates and fees for lenders, consumers pay proportionality larger amounts for borrowing on small-dollar loans, in comparison to longer term personal loans through a bank or credit union.
Short-term lending is great for situations where a person needs cash in a hurry, doesn't have an upstanding credit score, or won't qualify with a traditional lending institution. The problem, though, is found in the ease of obtaining these types of loans. Pew found that 58% of borrower's are already having a hard time meeting their monthly financial obligations and are turning to cash advance loans to deal with persistent cash shortfalls, temporary cash emergencies or unexpected costs.
While these short-term loans are expected to be paid back with the borrower's next paycheck, it is being found that the average length of time it takes most people to pay off their cash advance or payday loan is about five months. This is causing a great deal of frustration and dismay for consumers turning to this type of lending.read more
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