3 Reasons Why So Many People Use Payday Loans

Millions of Americans use payday loans each year. But are they a good fit for your financial situation? Here are three reasons why they could be.

3 Reasons People Use Payday Loans 734x480 3 Reasons Why So Many People Use Payday Loans

Unplanned expenses – like a broken furnace or a midnight trip to the emergency room – have a nasty habit of coming when you least expect them, and can leave you scrambling to catch up.

What you need is cash to cover your bills, and you need to find that money with as little hassle as possible. But in a sticky situation like the one you’re facing, where do you go for help?

What Payday Loans Were Designed to Do

Luckily, there is a financial solution for these types of binds, a solution designed with people like you in mind: a payday loan from a reputable payday lender.

Each year, millions of American households feeling the squeeze of a temporary setback turn to payday loans for help with their occasional money problems.

Why Payday Loans Are So Popular

Why have payday loans (sometimes called cash advances or payday advances) become such a popular choice for people making tough decisions? One reason is that payday lenders offer the emergency funds that cash-strapped consumers need.

But there’s more to it to than that. We believe that 19 million consumers choose payday loans over other types of short-term credit for three very good reasons: cost, convenience, and customer service.

Reason #1 for Choosing a Payday Loan: Cost

As the Community Financial Services Association of America (CFSA) points out, the finance charge you pay for a payday loan “pales in comparison to the realistic alternatives considered by consumers.” A comparison of typical fees:

  • Finance charge for $100 payday loan – $15
  • Reconnect fee for late utility bill of $100 – $28
  • Bounced check fee on overdraft of $100 – $30
  • Late fee for credit card bill of $100 – $35

Reason #2 for Choosing a Payday Loan: Convenience

One important benefit of payday loans is how simple and straightforward they are to obtain. No one has to tell you how much that means when you’re stuck in a financial emergency. Along with convenient walk-in locations, you have the option to apply for a payday loan online from the comfort of your home, office, or anywhere else you log on to the Internet.

However you decide to apply for a payday loan, either in-store or online, you’ll find that the requirements for completing the application are not overly demanding. Here’s all you’ll typically need to apply for a loan:

  • Current pay stub or proof of a source of regular income
  • Social Security number
  • Driver’s license or other valid government-issued identification
  • Active checking account

Reason #3 for Choosing a Payday Loan: Customer Service

Borrowing money unexpectedly can be a trying experience, one that’s full of uncertainty. Payday lenders understand your predicament and it’s why they strive to provide top-notch customer service.

Judging by the feedback they receive from their customers, they succeed most of the time. A poll of payday loan customers conducted by Harris Interactive produced the following results:

  • 80% of borrowers said they’d take another loan from the same lender
  • 77% said their payday lender was trustworthy, respectful, truthful, and helpful
  • 65% said they’d recommend payday loans to a friend or family member

Where You Go From Here

Only you can decide if a payday loan is the right choice for your circumstances, and it is always a good idea to carefully weigh the costs of any loan you’re considering. But when you do, you could decide – as millions of other people have – that the affordability and convenience of payday loans make them a financial solution worth trying.

 3 Reasons Why So Many People Use Payday Loans

About Donna Parshall

Donna is a regular contributor to Dollars and Sense, covering topics related to personal finance and frugal living. Before Check ‘n Go, she worked for more than 20 years in the insurance and investment industries. Donna’s writing has also appeared in Cox Media Group newspapers.