They simply don’t have any better options.
The biggest issue with payday advances isn’t the fee that is one-time though that is steep; it’s that folks will get caught in a cycle of rolling them over. Having to pay $15 to borrow a couple of hundred dollars in a crisis is bad, but it is probably workable for many people. Unfortuitously, since payday borrowers are credit constrained, have actually small cost cost savings, and therefore are low-to-moderate earnings, they frequently have a problem discovering the main if the loan is born to repay. The finance costs accumulate, rendering it hard to repay the mortgage.
Based on Lawrence and Ellihausen, about 40% of payday borrowers fall under that issue category: they have rolled over that loan five or higher times into the year that is past.Continue reading