Many commentators are asking why payday loans are now so popular in the US. Some may argue that the popularity of payday loans is due to high profile television and internet marketing campaigns. Although I would have to agree that this has undoubtedly had some bearing, the increase in the actual number of payday loans is mainly due to the increasing demand for short-term loans.
So why are people increasingly looking to borrow small amounts of money over short periods of time? The credit crunch has resulted in wide spread pay freezes, overtime bans and reduced working hours and many British workers are struggling to make ends meet, particularly when it comes to covering unexpected costs. Furthermore, the uncertainty surrounding both the USA and worldwide economies has resulted in a nervousness in the persoanl credit market: people are simply reluctant to enter into long-term credit agreements when their future job security may be under threat. Borrowing over the short-term has always been more popular in times of economic crisis for the simple reason that it avoids long-term repayments.
Payday loans are proving to be a popular form of short-term borrowing because they are quick and easy to apply for; they’re available on-line; they are an unsecured form of borrowing; no credit check is required and if approved, borrowers can get instant access to the cash they require. Last but by no means least, borrowers pay off the debt in full as soon as they get their pay cheque. This single repayment means that the debt is cleared quickly and there are no further repayments to worry about.