Typical Payday Loan Borrowers

Generally those who apply for payday loans have an inconsistent amount of cash flow and have difficulties getting this. These people also tend to use payday advances quite often because of the instability of their income. They usually just “roll over” their credits or gain additional subsequent extensions of credit. The cash flow difficulties that are usually experienced by payday customers indicate a long-term credit characteristic rather than a short-term temporary hardship.

Payday customers often rely on payday loans because they have either been denied other forms of credit or were not approved for as much credit as they had anticipated. These customers also have some other characteristics that point to having credit issues and credit availability. Some of these characteristics include borrowing from a pawnshop in the past five years, filing for bankruptcy in the past five years or making payments 60 or more days late on a mortgage or consumer debt in the last year. Because of the characteristics involved with the prime borrowers, payday lending is usually characterized as a particular form of subprime lending (subprime loans are for people with blemished or limited credit histories and are associated with a higher rate of interest than prime lending loans to compensate for the high credit risk).