Defending The Cash Advance Industry
Especially in todays economy, there are so many people who are in need of short term cash advancement
. Cash advance loans are usually small and short term advances that help people in pressing financial situations.
People have found relief in these loans to help them cover car repairs, medical costs and other unexpected financial burdens. For reasons from car repairs to medical expenses.
The industry was created to provide relief for people in times of financial crisis. And many people use cash advances to help them with those times. There are currently more than 10% of people who apply for a cash advance.
In the past 25 years this business has grown from a $10 billion industry annually to $25 billion. An argument for the industry is that it can actually save you money from the late fees and bounced check fees you may incur.
There have been surveys conducted to find the reasons people use payday loans. 75% of those who use them do so to cover unexpected expenses. If you are only a little bit short on money, a cash advance can buy you the time you need so you don't accrue more fees elsewhere.
As mentioned above, there are critics that put down the entire idea of cash advances. They say that some people can be trapped in more debt. Lenders are highly regulated in 33 states.
There are current restrictions on how much they can take advantage of a person's dire financial need. They are monitored on their interest rates, fees, number of roll-overs, the maximum amount lent and the maximum term.
Some states are even considering new legislation. Obviously you wouldn't want to use payday cash advances for long term debt issues like a car loan or mortgage.
The interest you would pay would eventually exceed the original loan amount. Payday loans aren't for every person or for every reason, and contrary to popular belief, most people who borrow are not very poor to begin with.
The average income for most borrowers is $25,000 to $50,000. A requirement for most lenders is that you have a bank account and have a monthly net income of at least $1,000.
The industry is gaining popularity and recognition in communities. Bank overdraft fees are typically $25.00 and usually mar your credit. Payday loans are a short term solution to such fees.
This industry is not just in the United States, but other countries as well. As the numbers of payday loans increase, some legislators worry that low income people are being taken advantage of.
Cash advance lenders do not target low income people. If they went after that income class, they would be putting more at risk and not getting their loans paid back.
Seriously, what lender of money wants that? They are in the business of making money so why target loans to people who cannot afford them? However, the industry argues that they provide opportunities for people who have normal, temporary, and unexpected financial needs.
These loans are much better than compounding late fees and bounced check fees that most people see every month. Borrrower's need to be the ones to advocate for the cash advance industry. Most people have a great lending experience.
There are those that do not, but upon further inspection, one might find that those people did not borrow responsibly. For instance, they did not read the fine print about late fees or what happens when they become delinquent on their loan.
Legitimate lenders will always display all their nitty gritty details and and will encourage a borrower to read the details and understand the loan. If the borrower does not become educated about what they are getting into, it is not the fault of the industry.
by: Jack Landry
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