The subject of payday loans has received a lot of attentions and speculations but one notable thing is that aging citizens are turning to using these loan facilities. According to report released by Center for Responsible Lending, it shows that about 25% of consumers opting for cash advance credit offered by banks are using their social security funds. You may be wondering if banks are offering these high interest loans but the truth is that they are indeed offering such loans but under different names.
The banks refer to these loans as fast cash, cash advance, and so forth. However, the latest statistics on short term loans with high interest rates seem to be impacting the seniors at an age where these older people should be refraining from debt. The fact that a significant number of bank payday loan borrowers fall under the seniors who are using their social security resource may not be a welcomed thing.
Banks are said to be offering short term loans which attract interests as high as 250 to 300 percent in APRs. Although most of the payday loans require that you have a source of income such as employment, for the seniors, they are using their social security benefits to qualify for these loans. In that study released by CRL, it also showed that in 2011, the average bank payday loan customer took close to 19 loans in a year.
As the payday lending industry continues to defend itself, perhaps for the senior consumer, this may not be the right option. At an old age, there are many uncertainties that may strike and need emergency cash but opting for high interest rates may not be a good solution. In old age people tend to suffer from health conditions because of the reduced immune systems and poor circulation of blood.
You may have frequent visits to the doctor as well as numerous treatments that take substantial amount of money. Nevertheless, this does not mean that the best way to get cash to meet these financial needs is to go for these loans. For one, these loans are easy to obtain and you will not have headaches when applying for them. There may be no credit check when getting approval for the loans. This perhaps is one reason, which entices the old to opt for these loans especially those with bad credit score.
But there are better options such are credit unions or even peer to peer lending. Banks may also provide personal loans at a very competitive rate. The question is; whether you as a senior, you will get approval for the low interest loans when you are in bad credit. The fact that over a quarter of payday loan borrowers are social credit recipients, it means that seniors may be carrying more debt, which locks them out from acquiring low interest loans issued by banks or other financial institutions. This is perhaps another reason why they opt for the payday cash advances.
The major problem is that they are borrowing at a time when they should keenly be watching their debt burden. This is a time when they can actually ill afford such financial burdens and they need to refrain from taking these loans and search for other better financial solutions. And, as an associate state director for advocacy for AARP noted, seniors are getting their social security benefits in the bank electronically and as soon as it is deposited there, the payday lenders are scraping it up.
This is certainly “swindling” the social security benefits of the seniors, a scenario that may lead to huge debt burden. Although banks seem to reject the label payday loans, they offer these credit facilities under different names like Fast Loan for Bank of Oklahoma, Easy advance for Guaranty Bank, and Direct deposit advance for Wells Fargo Bank, among other similar names.
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