Majority of the people have heard about payday loans. At one time or the other, you might have opted for this fiscal aid when there was unforeseen financial emergency that crops up. You know plenty of lenders and banks offer payday loans both online and offline. But, do you have any idea from where exactly payday loans come from? Do you know the history of payday loans?
A payday loan is a short term financial aid especially crafted for the salaried class people as best resort to arrange small amount of cash before their next salary day. This loan is offered against post dated check of the loan seekers who must confirm to have regular source of income with them.
Since last decade the industry of payday loans have gone from £100 million to £2 billion with high success rate during the time of global financial crisis and recession. The roots of the payday loans go back to the year 1980 in the United Kingdom and the deregulation of the interest rate was created by the Depositary Institutions Deregulation and Monetary Contract of 1980.
A hundred years ago, when a mass market for the consumers did not exist, underground consumers offer credit to the salaried class for one week time and charge APR from 100 percent to 500 percent which are similar to those charged by the payday lenders today. However, State policy makers undertook an effort to suppress one week salary lending process. By the middle of the 20th century, when mass market consumer industry was emerging and people had access to different lines of credit, finally offered license to payday loans in the year 1980. Thus, from the early 1990s, payday lending industry grew exponentially.
Now, today the landscape of small line of credit in the form of payday loans has fully emerged as a suitable type of fiscal aid for the salaried class people to remove their small cash crunches. Most of the federally charted banks offer, payday loans including triple digit of APR and lump sum repayment due on the borrower’s next payday. Moreover, several other companies are offering payday lending to consumers and challenged state regulators.
The basic premises of years old payday loans are high interest rate charged by the lenders. This has always been considered as calculated risk of a loan with high interest rate. Majority of people who face emergency circumstances of not having enough cash to deal with short term monetary issues, can rely on this fiscal aid ready to offer by lenders in exchange of high interest rates.
As whole world witnessed the expansion of internet in 1990, so came a new way of making communication, business and financial transaction possible far and wide. With the rise of interest, also witnessed the debit of payday loans online for providing convenient platform to loan seekers getting credit from the vary comfort of their home or office.
