Why are elderly individuals taking refuge in payday loans?

Payday loans are undoubtedly an easy and hassle free option when you face an unexpected financial crunch. Most of the people turn to this option despite the fact that these instant cash advances attract very high rates of interest.

However, recent studies have proved that elderly individuals in particular are turning to this financial aid in times of financial crisis. So, why is this trend gaining prominence despite the high interest rate? In this write up, this topic has been dealt with. So, read on for better insight.

What does statistical data imply?

As per a report, it is being observed that the APR or the Annual Percentage Rate charged in the previous year (2016) was around 372%, which increased by a remarkable figure which was recorded as 366% in the year 2015.

It was recorded that the seniors that survive on fixed incomes are in fact the largest in number to apply for the payday loans. This statistical data was as per trends recorded in California.

The age group of the seniors availing these loans was 62 years and above. And this comprised approximately 24% of the total individuals that applied for these loans. The total number of such loans availed increased by three times and was recorded at 2.7 million.

It was calculated that as of 2016, the total amount of these loans collectively extended to debtors accounted for USD$3.1 billion, however, the figure was USD$4.1 billion in 2015, a reduction in a small amount. Despite the difference, seniors are banking upon this cash advances as their financial aid in the times of financial upheavals.

Reasons for high demand

Two main reasons have been cited as the main motive behind availing these short term loans no guarantor type of loans. The two main reasons have been discussed below-

  • Easily accessible

One of the main reasons for availing these loans is that they can be availed without much hassle. And you will find the proceeds of the loan in your bank account within 2 business working days. Unlike other types of loans that require you to submit many documents and is comparatively time consuming, these cash advances serve your purpose without you having to run from post to pillar.

And if you avail these loans from lenders that adhere to the regulations and have valid license to legally operate in the country or for that matter in any other state, you can be assured that this is perhaps the best bet. For individuals borrowing from regulated lenders, the entire process is transparent and accessible.

  • Less documentation

In order to avail these loans, you don’t have to furnish an entire folder of documents. Of course, there are few papers or supporting documents that you need to furnish for the loan to get approved and disbursed. These documents are related to your employment status, age, address, bank account details so that the proceeds of the loan can be transferred in that bank account.

Tips for making short term loans work for you

In order that these short term loans work in the best possible way for you, there are few essential aspects that you can abide by so that you don’t regret of having taken out this loan. These are as follows-

  • Make sure you return the loan amount within the stipulated period (or when you get your next paycheck)
  • Read the terms and conditions of the loan that you are availing well beforehand so that you don’t get duped or taken for a ride should any discrepancies arise
  • Never roll over (carry forward) loan repayment since it can double the rate of interest that your loan attracts.

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