Cash loans can help you meet your needs especially when it comes to handling emergencies and taking advantage of business opportunities. Here are ten cash loan facts that you should know.
1. The Median Loan Amount Is $350
Most borrowers take $100 to $1,000 from a payday lender, but the median amount borrowed is $350. On average, the repayment period stated in their contracts is two weeks, but most of them clear their loans after 175 days.
2. The Average Interest on a Loan is 15% to 30%
That means you would pay $15 to $30 for every $100 you borrow. This interest is high when you compare it to the rate charged by most banks. For example, 15% interest on a loan whose repayment period is two weeks translates into an annual fee of 390%.
3. Qualifications for a Loan
The high rate of interest charged by cash lenders is probably because they would give you a loan without attaching many conditions to it. More specifically, they would not look at your credit score unlike banking institutions, which would deny you a loan if you have a poor credit score.
4. The Number of Payday Loan Stores in the United States
In 2009, the US had 20,600 cash loan stores nationwide. This figure dropped to 19,700 outlets in 2010.
5. Payday Loan Stores Outnumber McDonald and Starbucks Outlets
In 2012, McDonald and Starbucks had 14,157 and 11,563 outlets in the United States respectively. As mentioned earlier, payday stores totaled to 19,700 in 2010. That means it is easier for you to get a cash loan than it is for you to get a McDonald Happy Meal or coffee at Starbucks.
6. Payday Lending Totals to $40.3 Billion Annually
The sum of fees collected by cash lenders each year is more than $7.4 billion. Internet lenders are also growing in size and influence. For example, the loans they gave out in 2010 totaled to $10.8 billion with $2.7 billion collected in fees.
7. More Than 12 Million People in the US Borrow Payday Loans Annually
Each borrower takes an average of 8 to 13 loans each year from one lender. In California, borrowers who take 6 payday loans annually contribute to half of all the revenues received by cash lenders in that state. Nationally, 90% of the business generated by payday firms comes from individuals with more than five loans each year.
8. Restrictions on Payday Loans
The Military Lending Act of 2006 prohibited the lending of payday loans to people who serve in the military if the annual percentage rate (APR) is more than 36%. States like New Jersey and New York limit the APR to 30% and 35% respectively. Arkansas caps it at 17% while Georgia outlaws payday loans.
9. Cash Loans in the United Kingdom and Canada
The UK has more than 240 payday loan firms churning out over 8 million loans each year. Experts estimate that the cash loan industry in the UK is worth $2.75 billion. Canada has serious restrictions on payday loans. For example, you cannot take more than one loan at a time. The loan has to be less than 50% of your net income and the interest you pay on it cannot exceed 23%.