The Profile Of A Payday Loan Borrower
People who borrow payday loans have a few
characteristics in common. These people are more than just the average
Joe who has hit a tight cash squeeze. A payday loan borrower s situation
is extreme. Thinking about a payday loan for yourself? First see if you
fit into the profile of a payday loan borrower. Most payday loan borrowers
have the following in common:
They frequently have many characteristics
that show they have a credit problem.
Studies show that often payday loan borrowers
are not really in a temporary crunch. They ve actually been experiencing
credit problems for quite some time. And a payday loan usually is a new
thing the borrower has found out about that they believe will help them
along in their long-term financial hardship.
They ve usually borrowed from a pawnshop
in the past five years.
This is a sign of the credit problems
payday loan borrowers usually have. Pawnshops used to be one of the main
places where payday loans were applied for before payday loans started
becoming more commonplace. Pawnshop visitors are usually people who have
been dealing with long-term financial hardship. And a pawnshop just might
have the answer for some of these people.
They ve often made payments 60 or more
days late on a mortgage or other debt in the past year. People who seek
out payday loans have already been late on their other debts. Because payday
loans don t have a lot of criteria for approving people for the loans,
people who have a poor payment history on other debts are still able to
take out payday loans. However, because payday loan borrowers have often
been late on other debts, there s a good chance they ll also be late repaying
a payday loan. Or they ll end up just taking out another payday loan when
the first due date arrives.
Payday loan borrowers are frequent borrowers
rather than one-time borrowers
While most people think that the one time
they get a payday loan will be the last time, studies show that most people
who use payday loans use them often over a period of twelve months. Since
the interest on a payday loan is very high, it may come as a surprise that
people turn to this type of credit often, but it s true.
They typically believe they ll be using
a payday loan for a one-time emergency and that s it. After considering
the APR on a payday loan, most people get a little scared about applying
for one. But after they rationalize and tell themselves they ll only be
using it for one time, they re on they re on their way to the application
office. But as mentioned above, studies show many people end up having
to extend the borrowing period for their payday loans.
So after reading all of that, you have
to consider if the above payday loan borrower profile fits your situation.
Are you in long-term financial hardship? If not, you may want to consider
other methods of making ends meet. Until then, just remember to research
everything before making your borrowing decision.
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