First, let’s ask ourselves what sets a Payday Loan apart from any other loan? All loans have relatively high interest rates, but a Payday Loan takes the cake as one of the highest. Compared to an Installment Loan, a Payday Loan typically has to be repaid within 30 days or less. Unlike an Installment loan, Payday Loans also have a lower borrowing allowance. Is this what has caused a spike in Payday Loans through this generation?
A recent study has shown that Financial Education and the overall knowledge of finances has decreased immensely, specifically in today’s Millennials! When asked questions about APR Rates, mortgages, loans, inflation or even consolidating their loans, etc. two-thirds of Americans are unable to answer these questions correctly, predominantly millennials.
What makes Payday Loans so attractive to today’s generation and Americans overall? For the most part most people mostly use Payday Loans simply to “get by”, with that being said the most common reason someone would inquire about a Payday Loan is for bills. Other reasons include, an unforeseen emergency, an overdrawn bank account or even for Holiday shopping! None the less, with high interest rates, and a trap like system that makes it almost impossible for the borrower to get ahead it is always better to cut down cost spending and save money than be in a vicious Payday Loan Cycle.
Is there a correlation between financial education and financial capability? Or does the lack of financial knowledge cause a repeated pattern of payday borrowing? There is an even split between High Schools that provide financial education courses versus High Schools that don’t. With High Schools that do provide this to their students have seen a significantly reduced probability in their students relying on Payday Loans for quick cash. Most studies have found that while adults use Payday Loans to make ends meet, millennials tend to be using them for reckless spending. This is where Financial Education could play a vital role in the importance of spending and how Payday Loans could negatively effect someone in the future.
Although Payday Loans seem to be viewed as the “Big Bad Wolf” there are also solutions if ever anyone should find themselves in this financial situation. Payday Loan Consolidation happens to be the most popular one. Most people who obtain Payday Loans often are in debt in one or more area of their life, with that said Payday Loan Consolidation helps make debt manageable by combining all of your debt into 1 monthly affordable payment. Payday Loan Relief works in your favor by helping the viscous cycle of Payday Loan debt come to a screeching halt!