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You May Be Statistically At Risk For A Payday Loan

Written By emilie dane on Wednesday, April 3, 2013 | 9:52 AM


Recently, there has been a lot of talk about percentiles. With the presidential election on the horizon, Americans are being flooded with percentages and many are drowning in confusion. Payday loan lenders have been inundated with borrowers who are trying to stay on top of their bills. A deluge of mass media has emerged to cover the politic elections, surfacing statistical claims about economic differences among the American population and submerging any consistent sense of where one fits into the fiscal scheme of things.

These statistics raise questions that come with a lot of political baggage: Am I one of Occupation Wall Street's 99 %? Am I one of Mitt Romney's 47% who rely on federal benefits? And, if so, is this a bad thing?

These 'factual' numbers, which are meant to act as clear, logical backing for political campaigns, are leaving many Americans mystified, obscuring political agendas behind a silk-screen of percentages.

Let's face it; politicians employ these statistics, which may or may not be whole truths, to inspire voters to stand up for a cause--their cause. Among the aforementioned percentages, there is one common denominator: they all target or discuss an audience of low income families. In some cases, these statistics are used to draw attention to discrepancies between high and low income families, while others demonize those in the low income demographic as moochers and/or freeloaders.

Yet, another statistic that has not been addressed in the campaigns but that directly relates to low income families is the number of households in this demographic that utilize payday loan services. A PEW survey recently exposed that 72 % of payday loan borrowers have a combined family income of less than $40,000 per year. Clearly, those in lower income demographics are more inclined to borrow these high interest loans, which they are required to pay off at their own expense.

It is easy to comprehend the reasons that those in low income families are more inclined to borrow--utility bills need to be paid, children need to be fed and clothed, cars need to be in working order and fueled up. This becomes even clearer when considering that most payday loans are taken out to accommodate recurrent, necessary life expenses. Evidently, many low income American families are treading water, relying on temporary safety rafts, like payday loan lenders, to stay afloat, and getting closer and closer to a tidal wave of unavoidable debt.

This raises the questions: do the aforementioned political percentages and statistics accurately represent low income families who are relying on payday loans?

To answer the question, statistics rarely speak for themselves. Yes, over 40 % of Americans rely on federal benefits, but it is important to note that this percentage is largely made up of impoverished families, mothers with young children, and senior citizens. Without such services, more people from these demographics would be pushed to rely on payday loans and cash advances, furthering their debt and making them more susceptible to extreme financial circumstances, such as bankruptcy, which ultimately costs tax payers a great deal of money. It is important to note, additionally, that a person must be employed to take out a payday loan, challenging the idea that the low income families and individuals who rely on such services are freeloaders.

In short, not only is the onslaught of political statistics confusing, it is often unreliable, as it only presents a partial picture of the current circumstances of low income American families--a demographic which makes up a significant portion of the American population.

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