The Truth About Payday Loans

Payday lending has existed in some form for more than 100 years, but its current incarnation has been around since the early 1990s. A recent Pew Charitable Trust report on Payday Lending in America provides some eye-opening information regarding borrowers and lenders.

Most borrowers use payday loans to cover ordinary living expenses over the course of months, not unexpected emergencies over the course of weeks. The average borrower is indebted for about five months of the year. Problems begin when a borrower can’t pay off the original loan on time and is forced to take out another loan to pay off the first, thereby incurring another finance charge and creating a cycle of debt that is difficult to escape. This cycle causes not only financial stress but also emotional stress for the borrower.

Studies show financial stress can lead to loss of sleep, absenteeism, lower productivity, turnover, and workplace violence. Luckily, there is an alternative. Learn more about OnDemand Pay and how you, as an employer, can be the hero.