Why Do People Need Payday Loans?
Payday loans help people cover unexpected expenses with quick and easy cash. The loan application process can be completed online or in person, and usually money is available on the same day. These loans are available to lower income individuals with less-than-perfect credit, so they’re more accessible than a traditional bank loan.
For the majority of individuals seeking a payday loan, the money is needed for emergencies or to cover essential living expenses. A lower percentage of people use this type of loan to cover non-essential expenses such as entertainment or vacation travel.
Ideally, payday loans should be used for emergencies such as urgent car repairs. Most people who take out this type of loan do so because something unexpected and important has come up, and it can’t wait until their next paycheck.
Vehicle Expenses and Family Care
The most common reason people seek a payday loan is to cover car expenses. Vehicles are essential for most people to get to and from work, especially when another mode of transportation such as a public bus or subway is unavailable. Next to that, people frequently take out a payday loan for family and child-related expenses.
Healthcare and Existing Debt
A small percentage of borrowers secure payday loans for entertainment and travel expenses, while an even smaller percentage use these types of loans to pay for healthcare and veterinary care, and to pay back existing loans. Paying back existing debt with a payday loan is not a recommended practice.
Entertainment and Travel
While definitely not considered an emergency expense, people under the age of 25 are more likely to use a payday loan for entertainment or travel expenses.
Many Americans have recently lost their jobs due to the pandemic, and economic uncertainty is an unfortunate reality. While budgets are tighter and monthly income is lower or completely lost, daily living expenses and unexpected emergencies still need to be covered. A better financial climate is surely in our future, but for now, many Americans are struggling to make ends meet. If you are faced with an unexpected financial emergency, a payday loan may be able to help.