Payday Loans Becoming More Popular With Middle-Income Earners


As many middle-income earners struggle financially, payday loans are becoming a more popular source of money. Are they though the best option for a short term loan?

With prices on the rise across many staple household needs, including gas and electricity, petrol and food, many families face falling into debt as they struggle to keep up with their outgoing payments.

And it’s not just low-income families who are struggling, it’s middle-income families too. According to This is Money, around 57% of payday loans provider Instant Loans Direct customers, are people earning between $35,000 and $65,000 above the national average wage.


With credit cards maxed out, credit rating unattractive to lenders, payday loans can appear attractive as a short term loan. After all, for what seems a small amount of money you can borrow a few hundred dollars for a few days – that’s what they’re designed for, to get you out of a hole until payday comes.

Few credit checks are made and you can get the money into your bank account very quickly.

The issue is, for this convenient access to money, interest rates are very high, and can be equivalent to over 1,000 per cent.


If a loan is not repaid in the agreed time, the charges can be significant and you can easily find yourself with further debt that you have little chance of being able to repay.

The payday loans industry is already worth over $1 billion and growing rapidly as more and more people need quick loans and are either denied access to or are not prepared to approach conventional lenders, such as banks and building societies.


MoneyHighStreet comments: “When your salary runs out before the end of the month and yet you still have bills to pay, turning to a short term loan to ‘tide you over’ will be a welcome option for many.

The issue is though unless you address the underlying problem of your outgoings exceeding your income, you will find yourself in the very same position next month. In fact it’s likely to be worse in that you’ve added to your outgoings by the cost of your short term loan.


So can you set a budget so that your income exceeds or at least equals your outgoings? Can you save money anywhere?


If not, or you can’t totally balance your money, is there another option you can use for a short term loan? For example do you have any assets, such as a car, watch, jewelery or perhaps some art, that you can use to secure a loan?


In this way you are making your assets work for you. Of course you still need to pay the cost of the loan but in a worst case scenario you can sell your assets to cover the loan – or rather more positively get your assets back once you have improved your financial position with your better money management and sticking to your budget.


Another option may be to turn to family for a loan. Many are seeing this as an easier option and in certain circumstances it can work well.


If you are facing mounting debt though that you have no chance of clearing, even if you manage to get a loan for a period, you really need to tackle the route problem sooner rather than later – debt will not go away on its own, you need to take steps to clear it, getting advice from a professional organization.

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