Australians See Payday loans as the Answer to their Financial Problems
$1 Billion AUS is the amount of new loans that Australians are expected to acquire year after year. This number could still rise in the years to come. This is just one proof that a lot of Australian households are falling under the distressed household category and these households that fallen vulnerable into the trap of payday loans lenders.
However, even if there have been warnings about these lenders, still the number of borrowers are still increasing by the day. Thousands and thousands of Australians still file their applications for a payday loan because they see this as the immediate answer to their short-term financial needs and problems. The truth is it is. There is no arguing with that.
But with everything being played out by both lenders and borrowers, there is a chance that Australian loans will go beyond the $1 Billion AUS mark by 2018. And from then on this amount just might keep on growing.
It seems good business for lenders. It definitely is. But the thing about it is that borrowers might not be able to handle the high interest rate of this type of cash loan. If properly computed, the interest rate would be comparable to a 50 percent rate out of a regular loan. And since Australians are looking at payday loans as the answer to their short term financial problems, some of them might be enticed to take in more payday loans than just one.
These payday loans have seen an increase at a rate never been seen before in Australia. The thing is that this type of loan has been in the eyes of a wide range of borrowers. These short term loans were once the stranglehold of those classified as financially distressed households – these are the people who cannot get their hands on a regular loan. However, in the recent past, even those qualified to take out a regular loan are starting to look into payday loans as an option for them.
These are the people, who fall under the financially stressed household category, have the thinking that the reason why they are considering a short term loan is because they just simply need to borrow some money for a while and that their financial issues will disappear after a short while. A lot of this belief has to do with the lenders marketing arms. They have created a need in which those who do not actually need to borrow a short-term loan now see that they actually need to get one. Eventually, these borrowers might end up becoming a repeat borrower because the marketers will try and find another reason for them to borrow more payday loans.
This fact is backstopped by the fact that borrowers today take in an average of close to four payday loans in a year. The reason for this is that a lot of first time borrowers have become repeat borrowers already. And this is the main reason why this industry is thriving at the moment and in the years to come.