Loans (Photo credit: jferzoco)
Guaranteed Payday Loans have revolutionised the financial lending industry. So much so that the number of credit cards in circulation and the total credit card borrowing fell in 2011 according to a report by Price Waterhouse Coops (PWC). The driving force behind this is the repercussions of the global recession making banks and building societies far more cautious about what they lend and to whom.
The banking industry has never been under such scrutiny. They have been widely blamed for the global recession which continues to face us on a daily basis, because of their generous and unrealistic lending for mortgages that were beyond the borrowers means. This has led to the industry being placed under the spotlight, practises being questioned and consequently banks are now terrified to lend money for fear of being criticised. The implications of this are that customers find it harder to borrow money be it for mortgages, bank loans or credit cards.
Guaranteed payday loans are a product of these circumstances as companies have been rushing to fill the gap in the market for short term lending that the banks have left. Payday lenders work on the premise of lending a small amount of money for a small amount of time. They charge a high rate of APR because the loan is short term i.e. 1737% APR equals £25 for every £100 borrowed. They are quick and easy to apply for over the internet and there are generally no questions asked i.e. no credit checks therefore extremely accessible to consumers.
The rise of the payday lender is due to these factors as people who find it hard to borrow elsewhere turn to these types of lenders instead. They are now becoming a more mainstream way to borrow money. The biggest market sector is younger consumers who turn to payday loans firstly because they understand technology therefore use the internet other digital devices to make applications to the loan companies. Secondly, the younger generations are finding it increasingly hard to find jobs and also to find jobs that pay a reasonable amount of money. Most payday loan applicants earn under £25,000 and therefore need to borrow money to make ends meet.
The rise of the payday lenders is attributed to the fragile economy, lack of lending from the banks and the demand for short term borrowing especially from young people or people who are struggling financially. Guaranteed payday loans are easy to apply for, the deposit is quick to appear in bank accounts and there is little bureaucracy associated with the process, making it an appealing option for people facing financial difficulties.
