Payday loan consumers within the real world not well explained by stereotypes

Just like any group typecast in some way, actual payday loan borrowers are not who they are said to be. Payday advance lenders are also stereotyped by some people. It’s said that they target the most desperate, vulnerable and poor. Cash advance lenders are also said to concentrate in areas that are more densely populated by minorities. Like most stereotypes, the larger picture is really a little more complex. Just like most stereotypes, those views are untrue. Real life is rarely that simple.

The poorest individuals not able to get payday loans

The thing about the individuals who actually do borrow money from payday loan providers, be it from a payday advance store or online payday advance lender, is that they are not the poorest and most desperate. If you want a payday advance at all, an expected future payday has to be in the picture. One also has to have a checking account. Now, when it comes to banking, you will find two designated individuals that don’t use a bank for each and every need. The people in these groups can be called “unbanked.” They’re also called “under banked” sometimes. Based on the FDIC and the Federal Reserve, whoever has a transaction account, for instance a checking or savings account, but use alternate financial services, or AFS, for their needs nevertheless are called “under banked.”.

Must show proof of income

By definition, only the under banked can even get access to a payday advance. A stable income is one thing the customer must have. The unbanked can’t get a payday loan because they’re the poorest and most desperate. Furthermore, it’s economics, not ethnicity, which determines where payday lenders locate. Urban and rural areas are typically the best places to go for a payday lender. This is because you will find generally lots of people living there above the poverty line who are younger than 40.

Usually stereotypes are wrong

At least a high school education is something most payday loan borrowers have. They also make between $25,000 and $50,000 a year usually. That is what defines the middle class. Considering how very easily minimum payments and accumulating interest can trap a person for years, credit cards are far worse for that demographic. You can read more within the Payday loan Facts and Statistics Record on Personal Money Store.