Reports of real cash advance consumers are greatly exaggerated. Social crusaders also typecast payday loan companies as deliberately trying to hook the poorest and most desperate. It is also said the money advance industry is racist. The claim goes that loan companies locate in areas with heavy minority populations to target them. Like most stereotypes, the larger picture is really just a little more complex. Just like most stereotypes, those views are untrue. Real life is rarely that simple.
No payday cash advances are given to those who are super poor
The thing about the individuals who actually do borrow money from payday lenders, be it from a payday loan store or online cash advance lender, is that they’re not the poorest and most desperate. First of all, one has to have a coming pay day to even be considered for a payday advance. You have to have a checking account too. That is the next thing required. Now, when it comes to banking, there are two designated individuals that do not use a financial institution for each and every need. These groups of individuals are called the “under banked” and “unbanked.” The “under banked” are defined clearly by the FDIC and the Federal Reserve. They’re the people who use choice financial services (AFS) to get products although they still have a transaction account, such as a savings or checking account.
Proof of income is a requirement
The definition of the under banked shows one thing. They’re the only ones a payday advance is able to go to. Customers have to have a stable income. It’s a requirement. The most desperate are the poorest unbanked individuals. Even if they tried, they wouldn’t be approved for a payday loan. Payday lenders aren’t racist. They just move places where they will make one of the most money. Payday lenders tend to be found most in areas where there’s a high concentration of people younger than 40 who live over the poverty level which is typically in urban and rural areas.
Stereotypes never live up to reality
The average cash advance borrower has a high school education or better, and makes between $25,000 and $50,000 per year. That means it isn’t the lower class. It is the middle class being served. Credit cards use demographics much more than payday advances if you consider the trap that person gets into with minimum payments and accumulating interest. Want more facts and statistics of pay day loans? Check out Personal Money Store.
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