For many aspiring professionals in North America and beyond, it can sometimes be difficult to make a seamless transition from college to a new job.
With limited credit history, college loan repayments and limited funds, purchasing a new suit, paying for a haircut and then simply getting through the first month can be a daunting task. While some may be lucky enough to have family members or friends to borrow from in order to ease themselves into a comfortable position while they wait for the first of next month, many more are looking towards borrowing around the world. Payday loans in North America and Britain, or small loans called smålån, in Norway, are often utilized.
The traditional means approaching a bank for a loan can often be arduous for those looking for a small financial boost, and many find that they are rejected by larger financial institutions. For a large number of individuals in this position, payday loans can often appeal due to the higher acceptance rates and lower restrictions in comparison to a credit card or loan approval.
This type of loan can often be the difference between getting that job and having no way to support themselves, which forces them to abandon their plans. Providing the amount is no more than $500 or so, many see the terms of paying the loan back from their first or next paycheck as reasonable. With an estimated 12 million Americans taking out payday loans each year, there is no denying that this type of service is booming and looks set to grow even larger.
Who is more likely to apply for payday loans?
While payday loans are legal in most states in the US, they are heavily regulated in some and completely prohibited in others. In Britain, there are criteria which are imposed by regulators who insist on responsible lending. Places like Ireland, for example, have alternating options which are generally installment loans which require a collector to visit a home. As the loans are made in cash, repayments are collected in cash.
According to demographics, there are trends which suggest age, income, occupation, and marital status all contribute to factors which influence the application for payday loans.
- Those between the ages of 25-49 are more likely to use payday loans
- Those with household incomes of less than $40,000 are more likely to use payday loans
- Separated or divorced people are more likely to apply for payday loans
While the use of small or payday loans can often be out of necessity rather than choice, providing applicants are responsible and in a position to pay back the loans, they can often be very useful.
As circumstances and situations vary from person to person, any responsible lender should only approve an application once they are satisfied that it is affordable to pay back. Small loans and payday loans can carry high costs, but they are designed to be a short-term solution rather than a long-term plan. As with any form of credit, ensuring it is not abused or carelessly used, a small sum which you can reasonably commit to paying back may not be a bad idea at all.