Payday loans surge in popularity

15th June 2010

Despite the high interest rates of payday loans and the extensive terms that many of these companies have for their customers, the numbers of those who have been making applications for relatively immediate funding have been on the rise – and in social groups which many analysts were not expecting.

Because of how the recession and the rise in unemployment has hit those in sectors such as manufacturing hardest, deemed as ‘white collar work’ jobs, many experts have predicted that the key target market for payday loans would be the people who have been working in these industries. However, there has been an unexpected surprise as those from higher pay brackets have also been proceeding to apply for these short-term loans online and through different kiosks which are commonly available on the High Street.

The latest data which was collected from a cross-section of clients at one payday loan firm allowed for us to get a better understanding of which workers were more likely to borrow. In the top three included those who particularly took on administrative work, those who were working in the advertising sector, as well as those who are managers – three areas which were unexpected contenders for the target audiences that these firms address.

Aside from employment rates and target audiences, there is also information which has been providing insight on the proportion of male to female borrowers. The split is fairly equal – with there being slightly more women who are on the borrowing lists of loan companies in contrast to men.

Now – there is a pursuit for explanations as to why there could be so many people who are in higher salaried positions going through the processes to borrow money. It is believed that with underemployment now a prevalent issue and many people finding that there money is not going as far as it once was, a sudden expense for repairs and maintenance on someone’s main assets can be a financial difficulty which many people cannot handle without support. Savings are also believed to be at an all-time low in line with the economic tradition of spending more to increase consumer confidence following on from a recession.

Financiers believe that many people are rather responsible with how they handle their money, and are relieved to know that the majority of those who use payday loans do not build it into their monthly expenditure in a way that can result in a mountain of debt accumulating quickly. The priority often needs to be that people are responsible and wary of the implications that not paying a payday loan can have – namely the APR of the loans which can run into thousands of percentage points.

Times have changed and payday loans have certainly become more appealing to those from all walks of life. However, regardless of the people who are filing the application for that little bit more of security, the policy certainly remains the same: act responsibly when dealing with this method of finance.

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