The Pachyy Editorial Team comprises a diverse and experienced team of writers, researchers and subject matter experts whose aim is to provide you with useful insights, guidance and commentary on all matters related to your personal finances.
Over the past decade, payday loans have become increasingly popular. If you’re curious about who in the USA is using payday loans, it’s worth noting that approximately 12 million Americans rely on payday loans each year.
Who Benefits the Most from Payday Loans?
- About 85% of payday loan users in the United States do not hold a four-year college degree, indicating that payday loans are commonly utilized by those without higher education qualifications.
- Among individuals who rent their homes, approximately 58% rely on payday loans, making up 10% of all renters who use this financial resource.
- People who are separated or divorced are more likely to turn to payday loans for financial support.
- Those with lower incomes are the primary users of payday loans in America.
- In 2017, an alarming 44% of all military service members, both current and former, resorted to payday loans at least once.
Note: Payday loans can be a helpful resource for short-term financial needs but should be used cautiously and responsibly. It is advisable to explore alternative options and seek professional advice for long-term financial stability.
Welcome to the Demographics section!
Supporting the Younger Generations
We’ve noticed that payday loans are increasingly used by a significant number of individuals from the Millennial and Generation-X groups in the USA. We’d like to understand why this trend seems to be prevalent among these demographics.
One reason could be the burden of financial hardship caused by student loans. Many individuals from these generations are struggling to manage their finances due to the weight of student debt. It’s essential to acknowledge that Gen-Xers had to navigate a slow job market and accumulated substantial debt. Furthermore, the wages earned are often insufficient to cover necessary expenses, and the additional student debt only adds to the burden. According to a study conducted by Northwestern Mutual, the average debt for Millennials currently stands at $27,900.
- It’s noteworthy that 52% of all borrowers fall between the ages of 25 and 44.
- In addition, 9% of adults aged 25-29 have resorted to payday loans for their financial needs.
- On the other hand, only a small 2% of individuals over 70 have ever utilized payday loans.
Understanding the reasons behind these statistics is crucial if we want to provide the necessary support and assistance to the younger generations facing financial challenges. Let’s work together to find solutions that can help alleviate their financial burdens and promote a healthier financial future.
Understanding Socio-Economic Status
Hey there! Let’s dive into the concept of socio-economic status, shall we? Socio-economic status (SES) refers to the social and economic factors that influence an individual’s or a group’s position in society.
Support for Low-Income Households
Understanding Payday Loan Usage among Different Wage Brackets in America
Payday loans cater to individuals from low-income households who may be facing financial challenges.
It’s important to consider that individuals from low-income households often lack the necessary assets to secure a loan with low interest rates. Consequently, they are left with limited options, such as high-interest loans like payday loans.
Recognizing the circumstances faced by low-income individuals, payday lenders intentionally target those who are young and economically disadvantaged.
Remarkably, a study indicates that lenders specifically focus on reaching out to low-income communities near military bases.
Attention Renters: Important Information
According to the Consumer Financial Protection Bureau, renters often turn to payday loans more frequently than homeowners. We understand that financial decisions can be challenging, and we’re here to help.
The Bureau also wants you to know that individuals who are married, disabled, separated, or divorced are all considered typical consumers. Whatever your circumstances may be, we are dedicated to providing support and information to assist you in making informed financial choices.
Welcome to Geographics!
Did you know that payday loan borrowing is more common in cities? Around 7% of Americans who live in cities have used a payday loan. If you’re interested, we have a guide that reveals Which US States Apply For The Most Payday Loans? Take a look!
Here’s a breakdown of payday loan usage by geographic areas:
Urban – 7%
Suburban – 3%
Exurban – 6%
Small town – 6%
Rural – 6%
Welcome to Payday Loan Users – Statistics
- Did you know? Around 12 million Americans utilize payday loan services annually.
- The average income of payday loan borrowers is $30,000 per year.
- 7 out of 10 individuals who take out payday loans rely on them for regular recurring expenses, such as utility bills and rent payments.
- A typical payday borrower finds themselves in debt for approximately five months throughout the year.
- Did you know? On average, payday loan users borrow an amount around $375.
- By borrowing $375, payday lenders are paid an average of $520 in fees for their services.
- Approximately 80% of payday loans are taken out within two weeks of paying off a previous payday loan.
- 75% of payday loans are taken out by someone who has utilized them before.
- More than half of payday loan borrowers (58%) face difficulty in meeting their monthly expenses.
- Surprisingly, only 14% of borrowers can truly afford to pay back their loans.
- Average annual percentage interest rate (APR) for payday loans stands at a staggering 396%.
To discover more enlightening insights, we encourage you to read our article on “How Many People Use Payday Loans In The USA?”