Payday Loans: Who Uses Them and Why?


Payday Loans: Who Uses Them and Why?

Payday loans can look like a responsible choice for borrowers who need cash but want to avoid getting into long-term debt. The reality is that most payday loan customers end up in debt for 5 months.

This video follows the story of Jennifer, a fictional character who represents a typical payday loan customer. 12 million Americans take out cash advances on their paychecks every year. Like Jennifer, many borrowers take out these short-term loans because they want to avoid asking friends or family for money, their credit cards are maxed out, and because the loans are simple to obtain. To qualify, customers only need an income and a checking account.

Payday loans are advertised as emergency short-term relief, but most people borrow to cover routine living expenses like car payments, mortgage payments, credit card payments, utilities, food, and rent. 

In this video, Jennifer is unable to pay her loan back and keeps renewing it. Ultimately, she ends up paying more in fees than she received in credit, and has to borrow money from her parents to settle the debt. Learn more about how and why borrowers use payday loans:

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