Since 2010, 4 states: Colorado, Hawaii, Ohio, and Virginia have conducted extensive reforms concerning payday loan. The legislative believes it helps save millions of dollars of borrowers. In these 4 states, lenders profitably offer small loans that are paid back in favorable installments and cost 4 times less than typical single-payment payday loans. This confirms that states can effectively reform payday lending. It will include high consumer protections, guarantee widespread access to loans, and reduce the financial burden.
But, in most other states, single-payment payday loans are common. It is possible to issue payday loans at favorable terms and rates that make it easy to cope with temporary financial problems. Besides, nothing special should be done to apply for a loan online. Open the website, fill in an application, submit it and wait for the decision. The borrowed funds are transferred to the bank account or a credit/debit card. It is up to a client to decide what depositing option to choose.
About 350,000 payday loans are issued every day in the USA. At the same time, the maximum interest rates in the United States range 1-2% per day. The average size of a payday loan in the United States is $ 9,732, which is ten times the average size of a cash advance in developing countries ($973).
In most states of the USA, the services of payday lending organizations can be used by persons over the age of 18. Payday loans are most actively taken out before holidays and vacations, and the decline is usually noted in the summer months.
Portrait of a borrower: what do the numbers say?
- Age: 21-25 – 23%, 26-40 – 50%, 41-60 – 21%, over 60 – 6%.
- Marital status: unmarried – 59%, married – 36%, divorced – 5%.
- Number of payday loans per year: 7-10.
- In the USA, the average payday loan ranges from $500 to $4,000.
- Average term: payday loan – 30 days, personal loan – 30 months, business loan – 41 months.
- Average interest rate: payday loa – 1-2%, personal loan – 19%; business credit – 10.7%.
Why do Americans actively use payday loans?
Americans have long appreciated the convenience of loans in everyday life. This phenomenon has been developing for decades: why postpone the acquisition of any goods, save money for them, if you can use everything today, and pay for it later.
In addition to purchases of things, cars and real estate, even university studies are paid for on loan. Most students study in debt, and the loan is issued not to the parents, but to the student. After graduating from the institute, after going to work, young people begin to pay for their studies. This is a good incentive to study conscientiously and get high scores. After all, it depends on their competence how good a job they will find and how quickly they will be able to pay off their debts.
There are many different credit programs in the USA, people take out different loans for different purposes. Because each product provides preferential conditions in a certain area.