Payday Loan Statistics: What You Need to Know

The Consumer Financial Protection Bureau report states that more than 80% of payday loans are converted into new loans before they are fully repaid. These loans often trigger a chain reaction, which results in longer repayment of loans.

Why Consider a Payday Loan? 

Most people who use this type of loan do not utilize the loan to pay for emergencies or special purchases. The payday borrower takes out a high-interest loan with a long-term repayment plan to pay off their recurring expenses. We never advise consumers to take out a payday loan if it can be avoided.

Avoiding Financial Predators

The truth is payday loans wreak havoc in families who choose to take out high-interest loans. Let us remember the children’s book “When the mouse gets a cookie” In this case, the predator resembles the mouse. They thrive in the ground of financial desperation. You might think this is a solution to your current problems, but it actually brings much worse problems in the future. Many payday loans have maturities of just a few weeks and carry an astonishing annual interest rate up to 300%. Furthermore, most have high startup fees and aggressive due dates that can add up a significant value to your debts. This can quickly overwhelm borrowers who suffer from unexpected setbacks, such as losing their jobs.

There Is a Solution

Many consumers who are facing similar problems turn to payday lenders as a last resort. Those struggling with high-interest rates, high credit card debt, or lack of financial stability should look for ways to shore up their finances. Remember, the worst time to make such a decision is when you feel that there is no other way out. Taking out a payday loan can have unintended and often serious consequences, putting you in a worse position than when you took out the loan. 

If you’re tired of staying up at night, due to overwhelming debts, the certified financial counselors of CreditGUARD of America can negotiate with your creditors to set up the best payment plan that works for you. This includes reducing interest, stopping harassing calls, and eliminating late fees and penalties. Solve your debt problems by calling 800-282-8497 or you may visit CreditGUARD of America’s page at https://www.creditguard.org/ for more information.

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