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Demand for Short Term Loans is Increasing
In a recent article we touched on the many financial alternatives available to consumers. These types of online loans are available to those who have poor or bad credit. It’s better to borrow money from a friend or work an odd job. Compare that to getting stuck in a vicious cycle of taking out one payday loan after another. The mainstream media tells us we need eliminate payday loan lenders or installment companies. They tell us direct advance loans are toxic and all the large short term lenders are out to rip off the consumer. We see increased regulatory restrictions on many of the large direct payday lenders. You’d think there would be far fewer consumers taking out online payday loans. Believe it or not, that couldn’t be further from the truth. We’re hearing from a handful of large direct payday lenders that demand for their services is through the roof. This comes during a time when the payday loan industry is usually slow. The holiday rush is long over and most consumers are receiving their tax returns. You may be wondering, how can this be? Well, it’s simple. Because of regulations and government scrutiny there are few fewer options than an installment or short term loan. This means many cash advance and direct payday loan companies are stepping into the game of online financing.
Try to find a trusted direct lender online
Ever since the financial meltdown we’ve seen banks pull back on how much their willing to lend. Even though this cuts out the irresponsible consumer and looks good on paper it limits the options for the everyday consumer. Whether it’s personal loans or mortgage financing, there’s always a lender. This includes online companies that short term loans. We’re seeing fewer and fewer banks offering online financing as well as retail loans. Over the past few years most credit card companies limited the amount of available credit to consumers. It’s difficult even with a decent credit score. Pay your bills on time you’ve most likely seen your available credit restricted over the past few years. Someone in a cash crunch may need one of the large direct payday lenders to offer them a next day advance or installment loan. In the past they would’ve tapped available credit. Here’s another example of why consumers are moving towards payday loans. Most consumers can no longer access the equity in the house or vehicle. We can argue all day long whether this is good or bad for the economy. It reduces the amount of options for someone in a cash crunch. You better believe that person is going to turn to an installment loan if they can no longer use their credit card or home. Once there’s no more equity for a short term loan. Many banks own products that function much like cash advance firms. While many direct lenders offer online payday loans in most states. Several large banks have offered actual payday loans that are “direct deposit advances”. These direct deposit advances operate the same as a payday loan. The interest rate is high and you’re going to pay off your loan by your next pay period. The large banks flew under the radar for some time with these direct deposit advance loans. Over the past few months many of them have mothballed these pseudo payday loan programs.
Be on the lookout for low interest financing from your local bank
Consider how much the big banks have cut back on their consumer lending options. It’s no surprise to see an increase in consumers applying for direct payday loans. Most people think it’s good that banks are getting out of the direct lender business. As they are no longer extending credit to someone they deem questionable. The payoff for this is more consumers run out of traditional options who need a direct payday lender. As we’ve mentioned many times, payday loans aren’t for everyone. They’re still available as an option for consumers who need cash now. The US Government provides programs for consumers that may need help with their bills. This is a good option in place of taking out short term funding. With this type of Government help, a borrower can avoid huge interest rates and late fees. We’ll continue to track the demand of many payday products. Some of the reputable and licensed direct lenders will grow over the next few months. Stay tuned for an update as we track the lending environment.