Survey Reveals That Payday Loans Can Function Beyond An Emergency Fund

Most people everywhere often don't have enough money left for specific expenses before the end of the month

. Waiting for the next salary date becomes a challenge especially if there are pending expenditures which needs to be taken care of right away. Cash loans or payday loans provide people with access to quick cash immediately without too much hassle.

With economic issues troubling individuals worldwide including countries like the U.S. or Australia, pay day loans have become more popular than ever. In fact, neon signs of lending agencies offering this type of service abound everywhere although they are still unnoticed by some. Over the web, various companies are also providing a similar service in a more convenient manner. Applications are processed exclusively online or over the phone with no need for a personal appearance. Documents can be faxed or sent via email attachment.

Since 2008, this type of loan have been utilised by many as an emergency fund. But based on a survey, pay day loans are actually used for various other purposes. In a survey conducted by Pew's Safe Small Dollar Loans Research project, data reveals that approximately 5.5 percent of U.S. adults spend $7.4 billion per year at payday lenders. According to this survey, 69 percent of borrowers admit that borrowed funds are spent for recurring living expenses such as monthly bills or rent. Only one in six borrowers actually uses the loans for 'unexpected' or emergency expenses.

A person earning a regular monthly wage is bound to encounter financial issues beyond what his regular salary can afford to pay for at one time or another. Although pay day loans are being marketed as short term emergency loans, they are actually being utilised for living expenses in reality. Some of these include health or medical bills, household utility bills, personal monthly bills such as phone, Internet, or cable, school related expenses, car or home repairs, allowance, and even for petty reasons such as to purchase items on sale.

Payday loans are beneficial to numerous people, particularly low-income earners. The survey revealed that ten percent of renters and 4 percent of homeowners have used a payday loan at least once to pay for mortgage or rent. The survey further showed that the average loan borrowed annually amounts to $375 with borrowers applying about 8 payday loans yearly with each loan repaid in about 18 days on average.

These are some of the reasons why payday loans are popular:

-designed to provide borrowers with quick cash until their next paycheck

-it is easily accessible for everyone, even those with poor credit status

minimal requirements needed and does not require proof of credit rating and history

-quick processing and funds can be deposited to your bank account almost instantly

-easier to repay with its easy repayment options at small installments

The reasons above makes payday loans or cash loans one of the fastest growing segments of the financial industry. Even more, the availability of these loans online has made borrowing money for whatever purposes it is intended for easier for numerous individuals through a convenient and hassle-free process . Pay day loans can be utilised not only as an emergency fund but to finance all other expenses too.

by: Maria Marilyn Madrid

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