The Borrower

Customers of payday loan companies are usually informed Americans who make rational decisions, and understand what they’re doing. The borrower’s occupation ranges from teachers, fire fighters, civil servants, to members of the military. They usually have a middle-class income. They choose to use a payday advance loan as short-term tool for cash flow management. Most customers are one or two parent families who have not quite reached their peak earnings nor accumulated large amounts of liquid assets.

Typically one will have a moderate level of education and income. Most customers have favorable attitudes toward payday advance companies. A study conducted shows that ninety two percent agreed that it provides a useful service.

The positive attitude toward payday advances and the high level of satisfaction shows that customers continued to use payday advance companies by choice rather than it being a burden. A study conducted shows that two thirds of the customers are less than forty five years old with a median age of thirty two. Sixty two percent are females. Fifty percent have held their current job for more than three years. Twenty three percent have held their job for more five years and more. Sixty two percent have children under eighteen living with them.Nineteen percent of customers earned less than fifteen thousand dollars. Thirty eight percent earned between fifteen thousand dollars and twenty five thousand dollars. Thirty one percent earned between twenty five thousand and forty thousand.

The average annual income was between twenty five thousand and fifty thousand dollars. Most the customers were white and more likely to rent than own a home. Forty percent were married with children. Thirty five percent of the surveyed customers had a college degree. 53 percent said they sometimes, most of the time, or always live from paycheck to paycheck. 68 percent wanted to apply for credit but didn’t because they expected to be, turned down.

Only five percent of customers considered borrowing from family and friends. The average number of contracts per borrower was fourteen. Studies show that many people choose payday lenders due to unexpected financial emergencies, such as auto repairs, medical expenses, or a temporary reduction in income. Studies also show that forty percent of customers on welfare are severely dependent on Cash Advance Stat - The Federal Reserve discovers that when there is an increase in dependents in ones household, one may be likely to choose the assistance of a payday loan. Emergencies are among the largest reason customers take out a loan.