Nearly 12 million Americans seek to use payday loans each year. This source of financing is a great way to help borrowers cover their unexpected expenses, including the cost of medical bills or home repairs. So, if you have short-term financial difficulties and don’t want to use a line of credit – or your score is not good enough – a payday loan might be an applicable option.
On the other hand, if you seek a long-term solution, it would be better not to consider payday loans, as they come with high APRs and short repayment timelines, and are, therefore, expensive and unsustainable in the long run.
While some lending providers don’t ask how you plan to spend your Filld payday loan funds, keep in mind that this type of loan can’t give you a lot of flexibility and freedom. There are some limits when it comes to payday loans, and therefore, they may be not advisable for various reasons. So, keep on reading to find out the top five most popular uses of a payday loan and its common users.
Who Uses a Payday Loan?
In fact, anyone can find themselves in need of some urgent cash before the next payroll arrives. As we have said earlier, nearly 12 million the U.S. citizens use payday lending each year. However, according to the Making Ends Meet survey conducted in 2021, the lion’s share of payday loans’ target audience is people ages 25 to 40. Older groups of citizens ages 62+ are least likely to apply for this type of financing.
What is This Best For?
When many members of GenX and Millennials tend to take out payday loans, let’s find out what is a driving factor for them and what are the most common uses for different demographic characteristics.
Cover Unexpected Expenses
Customers often apply for payday loans if they have fallen behind on their day-to-day expenses, such as rent, utility bills, or car repairs, among others. More than half of U.S. citizens are not able to cover their emergency expenses with the help of savings only.
So, if you are one of them, a payday loan https://filld.com/no-fax-payday-loans/
could come in handy with any short-term financial hardships that life throws your way. That said, it is still important to look further into the future and start working on your emergency fund.
Pay for Medical Bills
The next most popular use for a payday loan is paying for medical bills. In America, one visit to the hospital can generate multiple bills, even if you have all the medical insurance benefits. Using a payday loan may allow you to take care of your existing medical bills or even cover upcoming hospital expenses that are not included in your insurance.
Cover Personal Events
It is so annoying when you have been planning something for a while and then life has thrown you some surprises. That’s why many people seek payday loans to cover out-of-pocket expenses, including a vacation, divorce, family planning, or funeral. Short-term financing lets you break down the overall cost of major personal events into fixed-rate installments that, if you are careful enough, will fit within your budget.
Get Home Improvements
Sometimes, people may need a quick need of some extra cash for home improvements, such as replacing broken pipes, and fixing damaged inside and outside home appliances. Using a payday loan for emergency home repairs allows you to get cash quickly so you can focus on protecting your place of living. Another reason for using a payday loan is that you don’t have to secure your home or have a certain threshold in credit score to apply.
Help Family Members
A payday loan is not only about helping yourself. You can use this source of financing to repay a family member or a friend you borrowed some cash from. You might also seek a payday loan to help someone you know who is in a tough financial position but has no opportunity to qualify on their own.
What Can You Not Spend a Payday Loan On?
Generally, payday loans are not meant for you to spend on long-term solutions and higher finance costs or to deal with student loan debt. However, more recently, Joseph Biden has announced a forgiveness program to relieve students from the hardships of student debts.
Technically, payday loans are not commonly used for consolidation, since they typically have much shorter repayment timelines and higher APRs than traditional sources of financing. Even if your provider allows it, using a payday loan for refinancing can affect your credit, negatively impacting your financial history.