Usually in a normal society people would be able to pay for what they need and if they are not able to pay they would have some kind of means of borrowing money to gain the ability to buy what they need. However, since we don’t live in the perfect world, people usually need to take out loans and budget around the payback period as sometimes they need that extra infusion of cash to be able to perform certain payments on time. Sometimes, it’s not even about making the big payments such as buying a house, sometimes you just need a couple of hundred of bucks to be able to afford an emergency, and when that time comes getting a loan from the bank is something that is out of reach for most people.
So, when that time comes most people turn to the payday loan businesses and their other financial institutions. The payday loan is a type of loan that is taken from a private institution that does not belong to the bank and that can make arrangements for that loan to be available in a short amount of time as opposed to the banking system where it sometimes takes months or years. However, these loans have a hefty interest rate attached to them, but it is not always the case.
If for instance you need a loan for a few days and you take out around 100 bucks, you can be sure that the interest rate would be lower than if you would take it from the bank.
The user demographics and reasons for payday loans
When we talk about the user demographic for these types of loans, you must understand that everyone that is available to take out these loans, usually fall into the demographic. You can find young adults, middle aged people, and even older people taking out loans, as they all need that fast boost of cash for an emergency.
For instance, if you need to pay a parking ticket fine, and you don’t have the money right now, it’s better to take out the loan and to pay the fine while it is low, then to get punished several days later with a more expensive fine. The demographic usually is more focused on people that are between the age of 25-35 as most people find themselves in strange situations where they need loans of this type. However, it’s also worth noting that there are many reasons why people take out these payday loans, but the most common use for them is to pay certain expenses before the payday at the end of the month.