History of Payday Loans

Pay day loans have become a buzz word today.

Whenever you go online or switch on your television sets, you will see something or the other about payday loans. Loans of this kind are nothing new. They have been around for a long time.

Payday loans are basically short term loans given to a borrower so he can make it till the next payday. It is an unsecured loan hence it does not require collateral of any sort. The lender may ask for a proof of employment or income to ensure that you have a steady pay check every month.

Pay day loans were introduced in 1930s.

The concept came from many stores or organizations which offered clothing, food etc on credit. The amount for the necessities you bought, were deducted from the next pay check. Stores of this kind were normally located on the premises of big offices and factories.

These kinds of stores brought about small mom and pop lending offices which were located in the local marketplace. The lenders also took the person’s social standing and their employment records into consideration before lending money. The post war recession proved to be a boom to the payday loan industry.

Today, there are over twenty thousand financial institutions that offer payday loans to people in the US alone. The government also recognized the need for lending petty amounts of cash to people and therefore payday loans became legal in most states.

Payday loans were also looked down upon when they were initiated. They were considered a step towards bankruptcy. The rise in consumerism has led to a huge rise in people taking pay day loans. It is really hard to predict the future of the loan market in today’s volatile economy. But one thing is certain, payday loans are here to stay for a really long time.

History of Payday Loans

вторник, 1 ноември 2011 г.