Why Payday Lenders Thrive in Our Economy
There has been much said about the payday lending industry as a whole. Some people feel that the industry itself is not well regulated and can be somewhat predatory. However, there is plenty of evidence to suggest that payday loans serve to fill a gap in the economy when some people are out of other options. Companies like PersonalMoneyStore.com provide a vital service boost to the economy.
The Payday Loan Industry Fills a Void by Providing Convenient Access to Short-term Credit
One of the biggest problems that people face after losing a job, getting a divorce or going through any kind of major life change is that they do not have the collateral or credit history to qualify for a loan from a typical bank. In a major event, they may need money immediately and do not have time to wait for answers. Payday loans provide a stopgap for a short timeframe that allows these people to stay ahead of their bills. While some individuals contend that the interest rates on payday loans are too high, it is important to realize that the next closest service is overdraft protections offered by the banking industry. A closer look reveals that the average overdraft fee is approximately $27 but can be as high as $38 for a single overdraft. In addition, many banks charge ongoing fees and interest on accounts that remain negative over a period of time, which creates an even bigger financial hole. Thus, a payday loan may actually be the cheaper alternative for those who face the difficult fact that the money is not in their account at the time their bills are due. Even if they roll their loan over several times into the next pay period, their fees will increase at a set and predictable rate, and they will have direct control over how many times they are charged new loan fees.
In many cases, people who use payday loans to save the day would be at risk of losing their homes, access to utilities and cars if they couldn’t come up with the money. These kinds of situations lead to a downward spiral where families are unable to achieve stable footing and recover from hardship. Instead, a payday loan can prevent them from falling any further behind and give them an opportunity to catch up in a manageable manner. This is certainly a positive contribution to the economy.
How the Payday Loan Industry Can Make a Substantial Impact on the Economy
Interestingly, in a time of growing uncertainty about job stability, the payday lending industry provides approximately 155,000 jobs nationwide. There are more than 23,000 lending locations in operation, and each one employs an average of three to four people. Their salaries are in the mid-$20,000 range; plus insurance and other benefits are provided. The direct impact of the payday loan industry is that it adds several billion dollars to the national economy. It also provides a large source of tax revenue for both federal and state governments. The total contribution per employee is roughly $36,000 to the economy as a whole.
Payday lending can be a force for good in both direct and indirect ways. Lenders act to provide a service to people in need who would otherwise risk even further instability, and they provide an important source of revenue to the total national economy through their employees and suppliers. Customers who utilize payday loans are given the opportunity to handle financial instability in a safe and productive manner without falling further behind on bills, even when they are unable to secure lending through resources that are more traditional. Meanwhile, the creation of jobs and the business-to-business spending incurred by the payday lending industry are a boon to the economy.
Visit http://www.Personal Money Store to learn more about payday lending services.