In 2020, it was estimated that the US payday loans market was worth roughly $32.48 billion. Used by over 12 million Americans each year, payday loans help many people to cover the costs of urgent expenses or emergency bills, with the opportunity to receive money upfront and pay off the loan in full on their next pay date from work.
- The payday loans market was worth approximately $32.48 billion in 2020 and is projected to reach $46.68 billion by 2030.
- Over 12 million Americans are using payday loans each year. This is through both loan stores and online platforms, although the Covid-19 pandemic has led to growth in online lending practices.
- Payday loans are legal in 37 states, with 9 of these states having stricter regulations than the others. For example, Colorado, Illinois and Montana have heavier restrictions with a payday loan interest rate cap set at 36%.
What Are Payday Loans?
Payday loans are short-term loans that are designed to give borrowers a quick cash injection to help tide them over until their next payday. This form of lending intends to help those in need of fast cash to cover an unexpected payment.
Whilst payday loans typically have high interest rates, they cater to all types of people and can provide temporary financial relief to borrowers with a variety of financial backgrounds and credit scores.
How Much Can Customers Borrow With A Payday Loan?
Lending regulations vary by state. To borrow $300, $500 or $1000 are common limits, although there are states that range above and below these values – for example the maximum borrowing amount for Texas payday loans is $200 in Texas but this can be up to $2,000 in other states. Locations such as Colorado, Illinois, Montana and Nebraska have a set interest rate cap of 36%.
At Dollar Hand, our customers have access to loans ranging from $100 to $35,00. We offer repayment periods of 2 to 60 weeks, although payday loans are typically paid back within a month of the date the loan was agreed. This is usually automatically withdrawn by the lender from the customer’s bank account, credit union or prepaid card account.
What Are Payday Loans Used For?
Used in times of need when pressing debts arise, payday loans offer short term financial assistance to help pay for unexpected bills. Examples include to pay for medical, dental or vet fees, house or car repairs and loans for funeral costs.
It’s crucial to remember that payday loans should only be used for important expenses whereby a customer needs urgent access to funds. Payday loans are not designed for any frivolous or unnecessary spending such as for partying, shopping or gambling. The idea is that you receive upfront money to help pay off a pressing bill and then repay back the loan once you receive your paycheck from work at the end of the month.
Can Anyone Borrow A Payday Loan?
To be eligible for a payday loan, there are usually a few certain requirements. For instance, to borrow money with Dollar Hand, customers must be a US citizen, a minimum of 18 years old, earn a regular income of at least $800 per month and have a bank account for the funds to be deposited into.
What Are Payday Loans Worth in the US?
According to Allied Market Research, the payday loans market was worth approximately $32.48 billion in 2020 and is projected to reach $46.68 billion by 2030, growing at a CAGR of 4.2%. Payday loans are used extensively by over 12 million people each year across all ages, particularly Millennials and Generation-X. Senior citizens aged 70 or over are least likely to borrow from payday lenders.
Justine is a full-time writer with lots of expertise and a wealth of experience in the financial world. In particular, she specializes in household income and consumer finance across the United States. Follow her articles for useful advice and top tips, guides on how to save money and lots more.