The rate of Americans' personal debt grows daily. 25% of Americans bringing in more than $100,000 a year are living paycheck to paycheck while 76% of all Americans are living hand to mouth. 47% of hard working Americans would be unable to find $400 in case of an emergency. These staggering statistics show that the majority of our country is one paycheck away from financial collapse and demonstrates the significant role short term lenders play.
"Short term or installment loans have been found to be an effective alternative to getting a payday or cash advance loan."
- The CPDF Annual Report 2016
According to a U.S. government consumer resource, payday alternative loans, or PALs, offer consumer protection features that should be used before a high cost payday loan. "Before taking out a high-cost payday loan, consider alternatives, such as: Talking with creditors to negotiate more time to pay bills. Borrowing from family or friends. Shopping for a credit offer with lower costs, consider a low-rate credit card. Inquiring about an advance from your employer. If you have an account at a credit union or bank, there may be less expensive alternatives available to you, especially if you have direct deposit or a stable credit history." Source: http://www.mycreditunion.gov/what-credit-unions-can-do/Pages/payday-loans.aspx
Keep in mind, the increasing regulations placed on payday companies and their high interest loans have allowed for online lenders to extend their higher quality loan products to include financing for those with bad credit and who want shorter terms. "[Online short term loans provide a borrower] with a speedy loan application, no fees for checking your rate, no prepayment penalties on short terms, and online application." Source: https://www.mygreenloans.com/short-term-loans/
To prevent credit card late fees, a credit score drop, or the inability to finance unanticipated expenses, responsible and smart consumers choose a personal loan with a short term, a fixed rate, and an installment payment plan. A payday loan is no longer the fastest and easiest way to borrow money. These personal installment loans give borrowers a more affordable choice when needing to access cash quickly. The loan's simplicity is what borrowers consider a short term loan's greatest benefit. With scheduled repayments, fixed rates, and short terms, a small dollar personal loan offer consumers an alternative to payday loans that is easier to control and pay off. Every part of the process is transparent and easy to understand. The fixed rate and term allows equal monthly installments. Borrowers know exactly how much is due each month. That $400 expense could have hurt their credit and future loan opportunities. Instead, a simple loan means the the bills were paid, finances were kept in check, and financial security is maintained.
Circumstances such as these are why CPDF exists. Informing borrowers of low cost loan options, encouraging the lending industry's fair practices, and promoting laws that protect consumers improves the financial and economic status of consumers. Effectively, this has been known to restore our nation's economic conditions and promote prosperity. Individuals should be afforded rights to short term loan products and services. The CPDF will continue to work for consumer financial rights and raise financial industry standards.