Not Just for Emergencies Anymore

The versatility of payday loans provides consumers with an easily accessible, readily available, and highly affordable alternative to conventional financing methods such as creditcards, liens, or other sources.

December 7, 2005 — A long-time misconception for many consumers is the thought that payday loans are explicitly used for the purpose of covering emergency costs and unforeseen expenses. According to the Community Financial Services Association of America (CFSA), payday loans are an attractive solution for many consumers who wish to temporarily supplement their income rather than use traditional long-term financing options and, in doing so, contribute to their own long-term debt.

Recent studies have shown that an increasing number (about 34%) of payday loan customers use their money to pay for planned expenses or other discretionary uses (source: CFSA). This demonstrates the flexibility of a payday loan as a viable option for consumers that are aware of upcoming purchases or expenses. This can be especially useful during the holiday season as expenses are known to rise for the average person by about $308 (source: shop.org) for middle-income families. The current payday loan climate also allows for the bypass of credit checks; this means the costs associated with such a process are not passed along to the consumer, nor are the credit bureaus informed of a consumer’s choice to take out this incredibly resilient type of short-term loan.

Unlike collateralized loans offered by many banking institutions, payday loan lenders do not require that the applicant surrender any form of guarantee other than proof of employment. This is, of course, where the product name “payday loan” comes from, as loans of this type are secured by the applicant’s next paycheck. Payday loan companies also do not require that the applicant supply a written proposal outlining the intended use of the money loaned and an anticipated repayment schedule; this gives consumers greater latitude in terms of use and also provides consumers the ability to repay the loan in their own time.

The versatility of payday loans provides consumer’s with an easily accessible, readily available, and highly affordable alternative to conventional financing methods such as credit cards, liens, or other sources. A payday loan has a clear repayment method built within it to help consumers stay out of debt, whereas other sources (such as credit cards) entice their users to pay back their funds over a much longer period of time. This costs consumers millions of dollars in interest each year – something that could have been avoided if they were aware that a cheaper, more convenient opportunity existed in the form of a payday loan.

More information about payday loans is available at http://www.aaapaydaycash.com