The American Center For Responsible Lending recently released a new report, and one statistic is particularly alarming. It states that almost 25% of payday loan borrowers in the USA are pensioners, who regularly receive social security payments.
This statistic is sure to shock many people, as payday loans were always typically a form of lending that was more popular with younger people and families.
Times have certainly changed however, as many people of retirement age are carrying more debt than ever before, and instead of being able to relax and enjoy their golden years, they now have to carry the burden of finding quick cash so they can pay the bills and make ends meet.
In the past, lenders wanted to see that applicants were in full-time employment before approving them for a payday loan. These rules have now become much looser, with lenders only wanting to see that there is some form of regular income to cover the loan. Of course, this could include government benefits, disability allowance, and social security payments.
A member of the AARP in Texas said, “they get their social security in the bank, and as soon as it gets there the payday lenders scrape it up. People who were short to begin with have no other option but to go back and get another payday loan.” With this in mind, it’s easy to see how pensioners can quickly fall into a vicious cycle of debt, taking out one payday loan to pay of another, and never making any progress towards becoming completely debt free.
While the information inside the new report has only negative things to say about this form lending, the payday loan industry have hit back with their own version of events. Many payday companies say that they are simply filling a genuine need amongst many people of retirement age living in America today. Millions are feeling the economic pinch, and they need fast money to pay their bills and buy groceries.
A spokesperson for a payday loan company commented, “when faced with a periodic or unexpected expense, a payday loan can be the less expensive credit option, as opposed to incurring an overdraft fee or bounced-check fee.”
There are many financial obligations for pensioners these days, especially when you consider that the cost of living is rising dramatically. Rising health costs and living costs are only the tip of the iceberg, as there are many unforeseen expenses, such as helping a struggling family member.