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The History Of The Payday Loan Boom

Mar 12, 2008
Payday loans didn't just come out of thin air. Just like most monetary tools, payday loans have a history all of their own. They have founders and they have milestones. Learning about the history of pay day loans and the payday loan boom may help you to become more appreciative of where payday loans come from and why so many people like them.

Make no mistake. Payday loans are definitely booming. That's because with the trend of the credit crunch and an increase in home foreclosures, people are constantly finding themselves in a bad financial state. They just don't have enough money to pay for what they need. With a growing need everywhere, payday loans and other types of unsecured credit are booming.

Where did the payday boom start? It started in the little check advance places on the corner somewhere around the 1990s. For the most part, the establishments that gave out payday loans were these cash advance places and pawnshops. Therefore, most people looking to get a quick payday loan had to search around in their local yellow pages to find a willing pawnshop or check cashing place. And hopefully, there were some in the neighborhood.

That was all fine until gradually other lenders started to catch on to payday loans. A few things about payday loans attracted them. They knew for instance that these loans were for people who either had been turned down for other types of loans or had credit that was so bad they didn't even try applying for credit cards and traditional loans. That meant only one thing; payday loan customers were usually in a desperate situation.

Other lenders were also attracted to something else about payday loans. These lenders knew high payday loan APRs would translate into a lot of profit for them.

Also, there is an extremely high demand on ways to obtain a small amount of cash in a small amount of time. It's been said that an estimated 44 percent of people spend more money than they make. That means there are tons of people looking for cash to so they can pay a bill here and there.

Now, it's expected that the number of payday loan lender locations will continue to increase over the years. If you add up the number of payday loan lenders on the net, there are probably already millions of places to get a payday loan. And as inflation increases, and more consumers start to buy things without the proper financial guidance, the demand and need for payday loans is expected to increase.

And it should come as no surprise. Payday loans continue to bring in billions of dollars each year as people neglect to pay them back on time. That could mean payday loan borrowing is doing something for our economy. But that also could mean it's causing more people to have to go into home foreclosure as they get caught in debt. So if you're thinking about being apart of the booming payday loan market, you can either open up a payday loan establishment or become a payday loan customer.
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