MoneyTreeInc
If you do not know the term "Pay Day" or its variations, consider yourself lucky. At least financially.
The term "Pay Day" is a euphemism. Let us first define it for what it really is MoneyTreeInc.
Payday lending is a form of short-term lending without collateral to people with little or no liquidity, or a bad credit rating. Pay Day is a generic term. Companies in this form of lending go by other names, such as Cash and Go, Advance Pay, Loan Up and Cash Carry. Sometimes these are also called Accommodation Loans or Instant Cash.
Whatever the name, here is a statistic to show how prevalent they have become in a few short years (probably last ten years) in the US. There are some 22,000 companies in Pay Day business, making $40 billion in loans and collecting $6 billion in interest and fees. This number may already be dated, since more companies are coming on line MoneyTreeInc.
REASON FOR PAY DAY POPULARITY
Here are the reasons:
- As a business model, it is proven to be resilient and profitable. Diverse portfolio, small exposure, short term nature of the loan and catering to a sector few traditional lenders touch.
- With Americans' incomes not keeping pace with inflation, and increasing illegal immigration, there is growing need for Payday type loans as more and more people live from paycheck to paycheck.
- While there is State level regulation on Payday practices, this form of lending is highly unregulated and as yet unchecked in any real form by Federal government. And State supervision is spotty. So no wonder new Payday type lenders are cropping up all over.
- Because of small loans and not much oversight, entry barriers are low MoneyTreeInc.