The Era of the Payday Loan

The payday loan industry in the USA is booming, that much you cannot deny. Lenders brokers and payday loan websites can be seen across all the W's of the World Wide Web. This influx of new lenders, brokers and those wishing to cash in on the demand for the USA loan product has seen American lenders coming to the USA and other countries also showing interest in the USA market.

This market it seems is unstoppable and has led many in Parliament to question whether or not the rate of interest the payday loan lenders charge should be capped. The Finance Bill 2011 which was proposed by backbenchers and Labour MPs alike was raised in a House of Commons speech in July 2011. The bill proposed that high cost lending such a payday advance companies be more closely regulated and the fees and interest charged to consumers be capped at a certain amount. What was introduced as a way of controlling this market was a tax to be levied at the lenders. This was argued against as counter-intuitive of what they know can happen in similar situations. The Tory MP was of course referring to the fact that when companies are faced with a tax of this nature they often pass on this, thus incurring charges to the borrower, this would then result in higher charges to customers using payday loans, and not a solution to the person in the middle - the consumer.

Payday loans are themselves the quick online solution for those who need cash fast. Whether or not this is a beneficial system for the borrower in the long run seems to be the issue. With companies like Wonga offering instant loans deposited in your account within 15 minutes and large websites offering online loans promising a similar service within one hour - is it not the time to truly accept that these loans are here to stay and that consumers are using these loans at their own free will?

Why are people using payday loans?

This question is quite complex in its nature, why does anyone do anything? Why does someone brush their teeth in the morning? Because they want to keep their teeth obviously. So when asking the question of why a person takes out payday loans; the logical explanation would be because they want money. The question should have perhaps then be re-phrased to why a short term loan is the only option these people in need of cash have. And the obvious answer would be because there are no other avenues of credit available for these borrowers.

After what we now know as the economic downturn, or those dreadful two words the credit crunch, we have seen people in the USA having their houses repossessed, their credit cards taken away and credit facilities that they once took for granted being frozen. This has all led into a sort of blocked up funnel of borrowers looking for fast credit and there being a lack of lenders to provide this.

The era of the payday loan is truly upon us, as people demand to feel good now and not tomorrow; so too do they demand fast credit facilities now and not tomorrow. They are no longer willing to wait for a loan they want one now and to hell with the price. It does appear that the charges payday loan lenders employ are rather top-heavy, but as long as people are willing to pay these prices then there will be lenders willing to provide the service.

The term pay day loans online have become synonymous with high credit lending, however, they do help a proportion of USA society declined credit through other sources. This means that at the moment online USA loans do have a place for USA consumers, whether or not everyone agrees with that is another question.