Pundits and consumer advocates would have everyone believe that the only people who use payday loans are the poor and uneducated. In reality, this couldn't be further from the truth. Study after study has shown that the typical cash advance customer is just like you and I. According to the industry association, the Community Financial Services Association of America (CFSA), a prototypical payday advance customer comes from a middle-income and well educated family. An overwhelming majority, 94%, have at least a high school education, with 56% having some college or a degree. Additionally, nearly half of industry clients own a home, about 42%.
It is clear that deferred deposit services are not targeted at the poor or uneducated. Instead, it is obvious that the product is used by mainstream Americans who are educated, financially and otherwise, and are more than capable of making informed decisions regarding their finances. After digesting this information, the reader may ask him/herself, "Then why do these people choose to use payday loans," a valid question.
The answer is actually quite simple. People want to do business with companies which treat them with respect, offer them a great service at a fair price, and provide excellent customer service. All of these characteristics are trademarks of the payday advance industry. When doing business with a CFSA member company, a customer can count on being treated like they should be. All fees will be presented clearly and concisely so the price can easily be compared to other credit products. If there are any questions, someone will always be ready to answer.
Applying for a loan is simple and hassle free, with applications typically being only one page in length. Besides filling out an application, all it takes to obtain a post-dated check loan is proof of income and address, along with a checking account and ID. After the application is processed, the customer walks away with a check or cash in hand. Requesting a payday loan online is even easier - most internet lenders don't even require any documentation. An application is simply filled out online and the applicant is contacted a short time later. The loan proceeds are then deposited directly into the consumer's account the next business day. No other industry provides credit in such a short amount of time and with so little hassle.
When compared with other short-term credit options, the price of a payday cash advance simply can't be beat. Bounced check fees are a great example. In 2004, the average fee charged for a bounced check was $28.51, and it's even higher today. Additionally, as some readers can surely attest, one bounced check often leads to more. With an average fee of just $15 per $100 borrowed, it is easy to see why people choose payday advances as an alternative to expensive non-sufficient funds fees.
When people choose to use payday advance services, they almost always walk away satisfied with the experience they had. And, the satisfaction doesn't end when loan is approved. All the way through the entire loan process, from filling out the application, to paying back the loan (and even during the collection process, if needed), the overwhelming majority of industry customers are happy with the service they receive. According to a Cypress Research Group study, that number is from 80 - 90% of all customers. More traditional financial service providers, i.e. banks, credit unions, etc. can't even hold a candle to that number. People who work in the industry realize that having such great customers is a privilege, not a right, and treat them accordingly.
It seems there will always be those who feel it is their duty to make other people's choices for them, whether it be financial decisions, or otherwise. In contrast, payday advance companies, owners, employees and customers know that the best way is to inform people of their options and let them decide for themselves. Consumers know their own situations, and have the ability and information necessary to make informed decisions about their credit and finances. After all, the people choosing to use payday loans are the same customers who choose to buy homes and go to college - which pretty much everyone agrees are great choices. So, next time you hear someone say that the payday loan store on the corner is robbing from the poor or uneducated, don't hesitate to let them know - chances are, the people who visit that store are pretty much just like them.