Watch television for long enough and chances are you’re going to bump into a payday loan ad. As a matter of fact, payday loan providers pour some of the biggest dollars into marketing expenditures.
Why do they do this?
Because every year, 12 million Americans take out payday loans. Many of those people take out multiple loans in a single year.
Given the interest rates and fees that payday loan products carry, every single customer could be worth thousands of dollars to a loan organization.
Don’t let anybody fool you into thinking that payday loan relationships are all one-sized though. Americans that take out fast payday loans are grateful that they’re available to them.
Payday loan borrowers use loans to get them over a number of financial barriers. Below, we share 8 of the most common barriers that payday loans help people circumvent.
1. The Holidays
The holiday season is supposed to be filled with cheer. For people that don’t have money though, stress is more prevalent than happiness.
People are expected to spend thousands of dollars during the month of December. If they don’t, they risk disappointing their loved ones.
Per that fact, payday loans become very popular as Christmas and similar celebrations loom.
2. Special Occasions
Birthdays, anniversaries, graduations… These are events that are meant to be celebrated. Much like the holidays though, celebrating is hard when you don’t have the money to buy gifts or take people out to fancy dinners.
Payday and other forms of quick loans are there for people so they can avoid the embarrassment of needing to sit important events out because they don’t have the money to participate.
3. Emergency Housing Help
If your partner were to lose their job tomorrow, would they have enough money to cover their half of the rent or mortgage? If not, how would you keep a roof over you and your family’s heads?
While payday loans are by no means a long-term solution to problems of that gravity, they can buy borrowers another month or two to consider their options and figure out which steps to take next.
4. Overdraft Avoidance
Sometimes, you can get carried away during the month with spending. This is especially true if you’re one of those people that love using credit cards.
If during a spend-happy month, you ended up burning more cash than you had bargained for and then realized that in a couple of days, your checking account was going to get overdrawn, taking out a payday loan could be a good way to work yourself out of that jam.
Payday loans provide overdraft-prone accounts with extra cushion for payments to clear. Then, when paychecks come in, borrowers can pay back their loans and watch their spending more closely going forward.
5. Impromptu Vacations
Are you feeling burned out at work? Are you tired of fighting with your significant other every day and feel like your anger is about to boil over?
If you answered yes to either of those questions, you might need a vacation.
Thousands of people take out payday loans annually to hop on a plane to Vegas, Hawaii, Cabo and other destinations around the globe so that they can unwind.
So, if you ever feel the need to go on a voyage, go for it. Your trip could literally be a 60-second loan application away.
6. Getting Married
Tying the knot costs tens of thousands of dollars these days. While some frugal couples choose to save up for their wedding extravaganza, others opt to lead with their love and use borrowed money to pay for the happiest day of their lives.
It’s estimated that 3 out of every 4 couples take on debt in order to pay for some or all of their wedding event.
7. Putting Food on the Table
Most of us like to believe that fast payday loans are used to cover “nice to have” things or at least things that people don’t absolutely need. Sadly, some people will apply for payday loans today because that’s the only way that they know how to put food on the table.
40 million Americans struggle with hunger every year. Only a select few of them even have the social infrastructure required to take on a payday loan for temporary relief.
8. Dealing With Loan Rejection
Let’s face it, payday loans don’t represent the best kind of loan product on the market. Many payday loans are offered by shark lenders that charge crazy interest rates and fees which are designed to really make people pay for their financial desperation.
Despite that, most people don’t have the credit history that’s required to successfully apply for low-interest big-bank loans.
Therefore, fast payday loans and their low-barriers provide a necessary (albeit imperfect) alternative to conventional loan products.
Our Final Thoughts on When Fast Payday Loans Are a Good Idea
There are a lot of financial gurus that campaign against fast payday loans because of their lender-friendly structure. While those guru’s intentions are good, for many, payday loans are what stands between them and absolute travesty.
As you’ve seen in our post, there are many reasons why taking on a payday loan is a good idea.
Whether your reason is to get married or to put food on the table, look over your payday loan’s terms before signing on the dotted line. Taking on a predatory payday loan may end up hurting you more than it helps.
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