If you are looking for some mind-blowing Payday loan facts that had for so long been latent under the sheets, this is the right place to look out for them. In the segment down below, we will be relating the top 5 truths of Payday loan debt and nuances of the same.
- An average borrower seeks at least 8 loans per year
We will start this list by mentioning that an average Payday loan borrower seeks at least eight loans every year; this number amounts to at around twelve million Americans and thus, the issue must be placed on the graver spectrum of the arrangement. There are several notches to this fact, starting from the overall escalated cost of living to the number of necessities swelling by the day, it all adds up to create an excruciating financial pressure on the citizen and narrows the prospect of help with Payday loans; and in order to steer away from the immediate crises which can arise from their disruption, the citizens resort to Payday loans to waive off the complexities for the time being.
- The APR of Payday loans averages 400% or higher
The APR or Average Percentage Rate can cost about 400% of the principal amount or in some cases, even more than that. If we review this situation as per the reports submitted by the Consumer Federation of America (CFA), this digit is likely to increase in the coming years. In the present term, the average loan term is about two weeks and the finance charges that are implemented against it cam fall between the window of 390% to 780% APR. In other cases, when the period is shorter than the usual stipulated term, the interest rates are even higher.
- Most Payday loan users file bankruptcy
If we weigh the number of citizens filed for bankruptcy, we will see that over the years it has always been the Payday loan users on the steeper side when compared to those without the loans. There’s a transparent cause that has led to this discrimination and it is often attached with the additional charges ensued due to late submission of dues and increasing interest rates. If the user doesn’t subscribe to Payday loan consolidation, it is most likely to land him into confusion and inescapable pressure leading to the piling up of interest rates failing which, the authorities will sue their customer. Thereby, the wisest thing to do would be to ask a professional to “consolidate my Payday loans” and get away with its complications.
- 32 states allow high-cost Payday lending
Another intriguing factor that can be brought up here is that 32 states of all 50 in the United States provide the high-cost Payday lending. This certainty reinforces that loans that are associated with interest rates of three digits and no rate cap whatsoever are allowed based on checks approved by the then borrower and their bank account. Nonetheless, 18 states of the country forbid high-cost Payday lending and no cap APR.
- Majority of the Payday loans are renewed
According to surveys, around 80% of the Payday loans are either renewed or rolled over within the fixed period of two weeks and inevitably, most of these users end up paying more for the interest than the principal amount that was originally borrowed. There are only about 15% of the users who repay the loans within the allowed time of 14 days without re-borrowing any loan and therefore no room for Payday loan relief.
