New research now available on payday lending customers
February 10, 2009 | customers, industry, research | Comments (0)Researcher finds that payday lenders provide a desired service to lower and moderate income, middle-educated, young American families.
“An analysis of Consumers’ Use of Payday Loans“ by Gregory Elliehausen, Division of Research and Statistics, Board of Governors of the Federal Reserve System and Financial Services Research Program, The George Washington University School of Business, describes the demographic characteristics of payday loan customers and considers whether they make rational decisions and if they benefit from access to credit.
Elliehausen notes that only 2% of U.S. adults use payday loans at any one time and provides a detailed picture of the typical payday loan customer, including who they are, how they use the service and their decision-making process.
According to Elliehausen, customers that use payday loans:
- Skew young; 63% have children at home
- Have lower and middle incomes; 41% earn between $25,000 and $50,000; 39% report incomes of $40,000 or more
- Are educated; 90% have a high school diploma or better, with 54% having some college or a degree
- Have limited liquid assets and savings, most use other forms of credit Have characteristics that may limit their access to credit Use payday loans moderately, as intended for short-term use
- Are aware of the cost of their most recent payday loan
- Consider the alternatives, are satisfied with their decision
- Benefit by having access to payday loans
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