Are Payday Loans Synonymous with Poor?

During discussions on payday loans, a recurring theme about the kind of person that seeks out a lender tends to emerge.

“It’s a scam to get poor and desperate people to take out a loan…”

“They prey on the desperate.”

“Sharks preying on the poor.”

While lenders typically claim their products are geared toward a wide array of demographics, it’s clear that the public’s assumptions on payday loan borrowers are all but cemented.

Borrowers are seen as poor, desperate, needy and vulnerable. If not on the topic of financial resources, you might assume these descriptions would be detailing a baby fawn.

However, as 100 Day Loans UK found in our 2012 Payday Loan Industry Sentiment Survey, the profiles of payday loan borrowers are a bit less finite than they appear.

The Payday Profile Reality

When non-borrowers were asked who they thought relied on payday loans the most, the results were fairly predictable.

Although some categorized borrowers as either financially illiterate, financially irresponsible or simply anyone in need, the majority believed that payday loan borrowers were reserved for the poorest segments of society.

However, as our survey went on to find, borrower profiles tend to cross not only assumed income thresholds, but unemployment stereotypes as well.

According to 100 Day Loans UK, nearly 19 per cent of users had incomes above £30,000, debunking the myth that the middle class is entirely removed from borrowing. And contrary to a popular belief that borrowers were straggling in off the streets, over 74 per cent had full-time positions.

Who Should Use a Payday Loan?

When it comes to a financial resource as sticky as payday loans, the answer to this question is never concrete.

Yes, payday loans can be convenient and readily at your disposal when in need of quick quid. However, this should never translate to a rushed, uninformed and uneducated decision on borrowing such a risky product.