Finance
An Introduction To Payday
The amount of cash people receive on their paydays is often not enough to pay for their financial obligations. This is especially true for people who do not have high-paying white-collar jobs. To meet the needs of such people, lending agencies have been established. Altogether, these agencies form the payday lending industry. They are the ones responsible for giving out payday loans and advances.
In the United States, the payday lending industry has been growing fast. During the year 2000, there were about 10,000 payday lending agencies. They registered a total of more than forty million transactions amounting to more than $1.5 billion. By 2003, the industry grew by more than 100% with the number of lending agencies exceeding 20,000. The amount of transactions amounted to 100 million and the corresponding fees reached six billion.
The payday lending industry started in 1990, in small shops offering check-cashing services. As years passed by, these companies grew with the largest ones focusing on payday loans. There are also multi-service lenders that offer additional services such as money orders and check cashing.
The enormous growth experienced by the payday lending industry has been brought about by the high profits such businesses earn. Profits have been reported to reach as much as more than 30%. Aside from this, the capital needed to start a lending business is only small. The money just revolves around the cycle of borrowing and returning. Of course, during the process, the money borrowed from the lender also grows by a certain amount of interest. Annual interest rates may reach as much as 400%.
Because of the large number of payday lending agencies, certain laws have been implemented to guide their business operations. In the United States, only 36 states permit payday lending. However, there are lending agencies that use commercial banks to get exemptions from state laws that prohibit such businesses. There have been contentions over this business, but payday lending agencies are still continuously experiencing growth. This trend will go on as long as people's needs and wants expand and become more expensive.
Payday provides detailed information on Payday, Payday Advances, Payday Loans, Payday Car Title Loans and more. Payday is affiliated with Copies of Paychecks. |
Eddie Tobey
Tags: Payday, Payday Advances, Payday Car Title Loans, Payday LoansSimilar articles
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