Who Operates Payday Loans?

Small independent check cashing outlets and pawnshops were the primary payday lending operators in the early 1990’s. Most of these firms specialized in making high-priced loans available to borrowers with limited credit access.

The number of payday lenders, however, has increased dramatically over the years. The higher fees earned on payday loans seems rather appealing to businesses. Another attraction to the business of payday loans is the high consumer demand for short-term, small denomination loans. Lately there has been a string of third-party lenders that are searching for outside help from larger insured financial intuitions due to the high risk of the typical payday borrower.

Analysts in the industry have estimated that there were only about 500 payday loan offices in the early 1990’s. That number has grown significantly. In 2002, there were an estimated 12,000 loan offices and clearly that number has increased even more. I can drive down a street in the downriver area of Detroit and spot at least two or three of them within five miles. Noticeably the demand for theses convenient loans have become much more popular to the regular, everyday consumer.