Who Are the Customers of Payday Advance Loans?
The payday advance loan is a small, short-term loan also known as a cash advance loan or check advance loan that meets the needs of a growing number of the population.
Part of the payday advance loan popularity is the fast, simple application process. Its minimum requirements are:
- The applicant must be a U.S. resident over 18 years old in most states
- The applicant should not have current outstanding payday loans
- Have an active checking account
- $1,000 minimum monthly verifiable income
After submission and approval of the payday advance loan, the borrower reads and signs an agreement containing disclosures required by the Truth in Lending Act and writes a personal check for the amount of the advance, plus a fee. The lender advances the customer funds immediately, but holds the check until the borrower's payday (hence the name).
State laws regulate payday advance loans. Today's payday advance loan lenders are required to provide agreements written in clear, simple language, and to disclose fees boldly upfront. Under the Truth in Lending Act, customers must receive, in writing, the finance charge (a dollar amount) and the annual percentage rate.
Customers who frequent payday advance loan companies come from the working and middle class population. Most have relationships with mainstream financial institutions. The Credit Research Center at Georgetown University conducted an analysis of payday advance loan customers that revealed that these customers are:
- Middle-Income
- Earning between $25,000 and $50,000
- "Middle-educated," with 94% having a high school diploma or better; 56% have some college or degree
- Young heads of families, with 68% under 45 years old
- Married; 64% have children in household
- 42% own homes
- 57% have major credit cards
That payday advance loan customers are middle-class Americans may be surprising to some. Even so, emergency loans are not right for everyone. Before applying, a potential customer should learn more about how these payday advance loans work. The Internet can provide tips from credit experts and information about using emergency payday advance loans responsibly.
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