Payday Loan Lender Are Extending Deals for the Borrowers
The U.S. Consumer Financial Protection Bureau has future plans to curb some rules that will impose regulations on what according to the consumers is called excessive fees and interest inflicted by the payday lenders. The payday loan industry is gradually spreading its branches into other industries, in terms of generating revenues and increasing its profitability.
The insiders of the payday industry have recently brought into light a new product based on longer deals that can also be addressed as installments loans. These loans are the product of the payday loan industry but they are similar to the auto loans and installment loans given by financial institutions. The conditions of these loans suggest that the customer can repay the loans over a long period, but only with higher interest rates.
With the establishment of this new loan channel, the players operating in the payday loan industry have opened avenues of growth for themselves. However, they are making more profits from addressing the financial needs of the consumers belonging to the low-income backgrounds. These are the consumers with often little or no data on their credit history available for the federal regulars to monitor and track.
Although payday loans seem to be a feasible option for most but rolling over the loan makes the situation worse. There are 12 million people in America who get their payday loan sanctioned each year. However, they pay $7 billion in the process of making repayments and paying interest on these loans. On breaking the data further, the interpretation might not be quite satisfactory for the payday loan consumers. It has been reported that an average borrower of the payday loan is stranded in debt for about 5 months of a year.
Considering this rapacious nature of the short-term payday loan, the long-term loan product introduced by lenders in this already established market seems like a solution that the borrowers have been looking for.
Not all the states in America are offering long-term payday loan to the consumers though. This might be due to all the criticism in the industry and media on policies associated with these loans. But if you observe this financial product being offered by the payday loan industry, you can identify the high level of convenience associated with it for the borrowers, who have poor credit and not enough cash available in weeks or months to make the repayments.
Considering the policies associated with this newly introduced product of the payday loan, it will most likely remain in limelight for a while. This is because it addresses the unique needs of the borrowers. There is a large group of people in America that not just have poor credit history but they do not have enough cash in hand to pay as a loan repayment in the short-term. They require time and this is where the payday industry comes into action, to address their unique needs that the financial institutions fail to address in the first place.