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US Sees Increase in Women Using Payday Loans

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In recent times US is seeing an increase in women applying for payday loans which is very surprising and shows that lots of women in US are now taking responsibility of running a family.

A few years back, it was believed that colored people, Hispanics, and Asians, and those from the economically weaker sections of the society were more likely to take a payday loan, irrespective of their location in the United States. But extensive studies carried out revealed something else. It was discovered that most of the borrowers are white and females. Most borrowers are between the age of 25 and 44 years. That was quite a discovery as it broke many myths about the kind of people taking these loans.

And now, there is increasing evidence to show that the number of women asking for a quick cash loan is actually on the rise. Studies have also revealed that this is probably not just a temporary thing. More and more women are likely to ask for quick cash. Not just that, women are also applying for more cash each time they are applying.

The Report from Colorado State

The Colorado state government has recently issued a report which states that 52.4% of all people asking for a payday loan in the state are women. This is not one state in isolation. It seems like a worldwide trend as similar reports are coming out from the other US states, Australia, United Kingdom and elsewhere in the world. In fact, in Australia, women asking for a payday loan have gone up by a staggering 110% over the last 10 years. That is quite a growth.

The report also states that a higher percentage of women in the state have been consistently asking for the loan over the last decade. In 2001 for instance, of all the applicants, 53.6% were women. Five years later, it stood at 53.2%.

Colorado has passed legislation restricting payday lending. That was in August 2010. A cap on the amount was brought into place, and the minimum term was extended to six months. However, this doesn’t seem to be stopping women from applying and getting the loan they need. If anything, the number of people applying has increased. Yes, some lenders went out of business in the state, but the others became more efficient and started serving more customers.

Here is Colorado Payday Loan Terms:

Loan Terms:
Maximum Loan Amount: $500
Loan Term: Min: 6 Months
Maximum Finance Rate and Fees: 20%: $0-$300 + 7.5%: $301-$500 plus 45% per annum interest plus monthly maintenance fee $7.50 per $100 borrowed, up to $30, after first month.
Finance Charge for 14-day $100 loan: Not applicable
APR for 14-day $100 loan: Not applicable

Debt Limits:
Maximum Number of Outstanding Loans at One Time: No limit if total debt does not exceed $500 and 30-days between loans
Rollovers Permitted: One renewal at 45% interest allowed.

Collection Limits:
Collection Fees: One $25 NSF fee; Court Costs; Reasonable Attorney’s Fees not to exceed loan amount
Criminal Action: Prohibited (Unless the consumer’s account was closed before the agreed upon negotiation date)

Data taken from:

Why Are Women Taking Payday Loans?

What are the reasons for so many women asking for the loan, and why are they asking for more money? Let us investigate.

The experts are saying that there are a few reasons for this.

An Effect of the Recession?

Firstly, we are still not out of the effects of the recession, though it is a few years behind us. Many people are still unemployed. But what is more worrisome is that, a larger number of people are underemployed and working for less than what they are worth. The cost of living is also going up across the country, which of course compounds the problem. And it’s a known fact that women often have to face the worst consequences of any downtime, as usually, they are the ones who take care of the immediate requirements of the family. Pressed on survival basics such as need to pay urgent bills, clothing and food, and without much money in hand, they have no other option but to take a quick cash loan that gives them the solution they need. Often, a lot of these people will be turned down by the banks, which of course is a problem.

Data shows that more women lose jobs as compared to men when there is recession, and even after this. It can be difficult to look after the family if there is no full-time employment. In the absence of cash to solve urgent needs, they can go deeper into poverty as they can approach the gray market and become victims of loan sharks.

Data from Colorado also shows that women here are making $330 less as compared to men on an average. So it seems that they are the ones who need to extra cash to make both the ends meet. Even for the same work, often, women are making less money, and this is true not just in the state, but beyond it as well.

Women are Becoming Independent

While the first reason is a negative one, the next one is positive. More and more women are seeking financial independence now. Both married and unmarried women are starting their own small businesses, and sometimes they get big too.

Businesses of course need cash from time to time for a variety of reasons. Sometimes, it is to buy resources, sometimes for marketing, and sometimes to pay wages. Quick cash can make a world of difference. Without it, the business can lose out to competition. Even big enterprises need cash. It is of course even more important for small ones. With quick cash infusion, businesses are often able to benefit from a sudden situation.

When you need quick money, the banks and conventional financial organizations are not the place to go. That’s because they take a lot of time in processing the application. This can beat the very purpose of taking the loan – quick action.

Payday lending is just the opposite of this. The money is disbursed in 48 to 72 hours after you make the application. Plus, you don’t have to explain why you need the money, and so the funds could be used for a variety of purposes. That is just perfect.

Domestic Issues

A few experts are of the opinion that women in families where there is domestic violence are being forced to take credit. In some instances, a dominating partner is coercing them to get into debt, and then, they are forced to hand over the money. This certainly is abuse, but it is happening not just in the United States, but elsewhere in the world as well. That’s the opinion of those who are working with the victims of domestic violence, such as the Citizens Advice Bureau. Citizens Advice workers have filed a report coinciding with the International Day for the Elimination of Violence against Women. They have suggested that psychological and emotional abuse should also be treated just like domestic violence. But it’s not just the women, even men are sometimes the victims of this kind of abuse. However, nine out of ten abused people are women.

No matter what the cause, it is a fact that more women are now seeking payday loans. Without it, their life will certainly be much harder.

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