Over the past few years, annual payday loans have regularly topped the four million mark. Youngsters using short term loans make up a part of this number.
Cashfloat is a short term loan company that specialises in payday loans. As a responsible lender, loans are available for those over the age of 23. Youngsters using short term payday loans NJ loans is not a new phenomenon. Short-term loans across different loan companies are taken out yearly by an audience of over one million people. Loans usually amount to an average value of around ?250. While those figures provide an overview and basic insight, they don’t tell the full story.
Why do youngsters use payday loans?
The situation surrounding the young adults is vastly different to those of other demographic. They are by far the most likely candidates for a payday loan, but what are the reasons for youngsters using short term loans?
Short-term loans through the payday loan system have become very popular in recent times. Consumers can borrow small amounts of cash, usually between ?50 and ?1,000, within a matter of minutes. Moreover, you can access short term loans on the basis of your earnings.
In theory, short term loans are for people that need a quick loan advance to escape a temporary problem. Good examples of this include car breakdowns, problems with the home, or unexpected bills. In reality, the fact that over four million loans will be taken out over a 12-month period suggests that people use short term loans for more than emergencies.
Under the right circumstances, direct lender payday loans can be extremely useful for the borrower. Likewise, stricter regulations established in 2015 by the FCA are there to protect consumers even further. For example, a lender can no longer charge more than two times the original value, which can stop issues from spiralling out of control.
Youngsters meaning well use payday loans
To say that young adults are most likely to use payday loans is an understatement. Figures from Citizens Advice suggest that up to four in 10 young adults will use a payday loan at some stage or another. Given that roughly 1.2m people covering the entire population will take one, those stats are out of sync with other audiences.
Perhaps more worryingly, there is a correlation between youngsters using short term loans and taking out several payday loans throughout the year. Ultimately, this means that young people are more likely to fall into the trap of using payday loans only to stay afloat. Frankly speaking, this goes against the principles of what is supposed to be an emergency fund. Sadly, though, very few lenders are going to turn away increased business.
Under 25s are far more likely to use payday loans than bank loans and other forms of credit. There are some factors contributing to those statistics. But the bottom line is that nearly two-thirds of all credit taken from this generation are through short-term payday loans.
Another trend worth noting is the fact that this demographic is the most likely to file complaints regarding their payday loans. They often feel victimised by being sold an unclear plan that they simply couldn’t afford. That makes them the most vulnerable audience for missed payments and the subsequent excessive fees.
Every individual case stands on its own merits. However, the figures for the youth demographic show that there is a definite trend for youngsters using short term loans. In truth, the list of potential reasons why someone under 25 may take out a payday loan is endless. Nonetheless, there are clearly some underlying issues Youngsters using short term loans.
