Blog Business, Economy and Finance in Canada
Fast online cash loans, payday loans, bad credit loans – these terms are everywhere these days. We all know what a payday loan is and to some extent, we all have an idea of how they work. ‘Fast cash loans’ just seems like a fancy term to a simple transaction. The borrower borrows money from the lender which he repays along with some interest to the lender within a specified time.
However, it is shocking to know that the payday-loan market accounts for about 40 billion dollars every year and also serves approximately 19 million households. It has also become an important source of national revenue and this market provides jobs to a large number of people. The question is: how can a simple short-term money lending business which operates online be able to contribute so much to the national revenue of a country, to provide jobs to a huge number of people when there is job uncertainty everywhere and to have thousands of branches operating in different locations? Maybe we should look into how these fast cash loans work keener.
In 1990, there were around 200 payday outlets. These outlets were not exclusively for the money-lending business, but an extension of some core business. Wealthy businessmen incurred additional profits by lending money to the common working middle-class people and made a side business out of it. Today, the fast cash loan lending industry has more than 23,000 operating locations all over the world. The transactions are done online, keeping up with the growing technological advancements, and getting credit from an interested lender is as quick as it can get.
In just a decade, the fast cash loan lending industry has grown almost exponentially and is still growing rapidly. The growth is usually concentrated in states where the state laws do not impose excessive limitations on the operations of the loan lending business. In some states, the lenders can charge interests up to 12% and there are lesser constraints or no regulations monitoring these lenders. Payday loan market thrives best under these conditions and these states have multiple branches, offering monetary services to the people.
But, inspite of the increased competition in these states, the interest rates are not reduced. The common economic law of demand and supply is defied here. Though there are more lenders, the interest rates still continue to grow. However, there is a reason for this increased interest rate. Fast cash loan lenders spend a substantial amount of time and resources monitoring the status of their loans and trying to minimize the number of defaults. They have to be extra cautious because they offer loan services to people with bad credits as well. Majority of the people who opt for payday loans are those who were not able to secure a loan through a bank or other traditional financial institution because of their history of bad credits.
The payday loan lending industry has set the interest rates high in order to cover for their loan losses and the risks associated with lending money to people with bad or no credits.This increased interest rate is acceptable, given that they are to be used short-term and repaid within the next pay day. The fast cash loan lending industry has been around for quite a while now and it will continue to thrive as long as there is a demand for it in the market. Esteemed agencies like Lendgreen will always be in demand because majority of the working population now is living paycheck to paycheck with barely any savings for unplanned and unexpected emergencies. The market for fast loans will prevail till it is replaced with better alternatives.