US Payday Loan Survey - Fact and Fiction
Although there is limited data available about UK payday loans, payday lending has existed in the USA for over 10 years. For this reason, we have included some information from a recent payday loan survey in case this information is of interest to UK payday loan customers.
1. Payday Advance companies prey on poor, uneducated or older consumers.
FACT: Payday advance customers represent the heart of the working middle
class.
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Majority have incomes between $25,000 and $50,000.
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68% are under 45 years old; only 4% are over 65, compared to 20% of the population.
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94% have a high school diploma or better, with 56% having some college or a degree.
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42% own their own homes.
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100% have a steady income and an active checking account (required for an advance).
2. Payday Advance companies charge outrageous rates.
FACT: Payday advance fees typically cost less than customers' alternatives.
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Bank/merchant fees on one bounced check can cost three times that of a $100 advance.
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Payday advance APRs are often lower than customers' alternatives (on the same 2-week term).
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$100 payday advance with $15 fee = 391% APR.
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$100 bounced check with $48 NSF/merchant
fees = 1,251% APR.
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$100 credit card balance with $26 late fee = 678% APR.
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$100 utility bill with $50 late/reconnect fees = 1,304% APR.
3. Payday Advances put customers into a cycle of debt.
FACT: Most customers use payday advance responsibly and moderately.
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It's a closed-end, short-term transaction with a one-time flat fee. No revolving debt and no additional fees or accruing interest if not paid when due.
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66% use payday advance to cover unexpected expenses or a temporary reduction in income.
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34% use it for planned expenses or other discretionary uses.
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60% either did not renew in the last year or renewed only 1-4 times.
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Research and regulators confirm more than 70% use the service about once a month or less.
4. Payday Advance companies take advantage of unsuspecting customers.
FACT: Payday advance customers make informed decisions and receive consumer
protections under law company best practices.
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Millions choose payday advance as a dignified, discreet solution for temporary cash flow problems without asking family for money or pawning personal items.
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70% choose payday advance for reasons of convenience (quick, easy process & fast approval).
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96% are aware of the finance charge & 78% recalled it being disclosed as an APR.
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92% believe payday advance is a useful service, only 12% were dissatisfied with last advance.
