22 Apr Are Instant Payday Loans Taking Over?
Studies show that more young people are relying on alternative financial institutions than ever. When we say ‘alternative financial institutions’ we’re referring to the hundreds of payday lenders, check cashing vendors and prepaid credit card organizations. According to a recent survey found on Forbes.com, it’s not only poor young people that are taking to these institutions but also well off young people. The question is ‘why are so many young people using these organizations instead of well recognized institutions?’
It is fair to assume that ease of access plays a big role when young people decide who to do business with. Recognized cash advance companies promote accessibility by providing instant payday loans. For example, Private Loan Shop offers a quick 2 minute loan application form with instant approval and cash delivery in under an hour. It’s the fast, hassle-free nature of online payday loans that young people gravitate to. Folks under 35 tend to live fast paced, demanding lives. In fact, this is the demographic faced with the more financial emergencies than any other age group. When it comes to getting a loan, a payday loan is probably the fastest and easiest way to acquire funding. For this reason, young people tend to use alternative financial organizations like payday lenders.
Another major reason why young people are turning to non-government owned financial institutions is because of a lack of credit. When you’re young and just entering the credit zone you are seen as high-risk for bank loans and lines of credit. It takes a while to build a credit portfolio and as such, young people often seek payday loans simply because they do not require good credit. Likewise, young people are often looking for prepaid credit cards from alternative financial institutions for the same reason. Typical banking institution do not issue loans or credit cards to young people who have no credit or bad credit.
In addition to a lack of credit worthiness, young people often choose payday lenders because they want privacy. It is true that payday lenders are more conspicuous in terms of privacy. For example, if you go to the bank and borrow $1000 there is a high risk that someone (spouse, parent etc) will find out about the loan; possibly via paper trail. Conversely, a payday loan is more private. You do not have to walk into a branch to get a cash advance. These days, you simply apply online, which lessens the chance of you running into someone you know. It also saves you from lining up and explaining why you need the cash to a financial adviser. Payday loans are better than banks when it comes to privacy.