Payday lenders are financial firms offering small, short-term loans designed to be paid back when the borrower next receives a paycheck. Such loans carry interest rates that seem small but are extremely high when calculated over the course of a year.
Payday loans are marketed as helpful for unexpected or emergency expenses. However, 7 of 10 borrowers use the loans for basic expenses such as rent and utilities. This comes as no surprise since as many as 58 percent of borrowers have difficulty meeting basic monthly expenses.Apr 10, 2019
We found that for the most part Americans use payday loans for essential expenses rather than entertainment or paying back other debt. Just 2.3% of payday loans are used to repay other loans, a practice that can leave borrowers with revolving debt that can be difficult to escape.Sep 16, 2020