When you find yourself struggling to meet financial ends, the thought of taking out a short-term credit may start to cross your mind. One option is an online payday loan of $255, but be aware that these products usually have high fees that could end up being more expensive than you anticipate. That is what you are used to hearing many times.
But despite the many warnings about the dangers of payday options and the advice on how to avoid them, a significant number of Americans, 12 million to be exact, still turn to these high-cost, short-term sources of financing.
This article aims to shed light on the demographics and circumstances of these people and understand why they choose to take such credits and what their experiences are like.
What is a $255 Payday Loan at Filld?
Payday loans are a type of short-term allowance that can be obtained quickly and easily, with little to no credit check required. These loans are usually for small amounts, such as $255 or more at Filld, and have to be repaid in a short time frame, usually within two to four weeks.
The amount of $255 is commonly advertised because it is a relatively small sum that can be borrowed and repaid quickly. This amount may be what many people need in a short period of time, and it is reasonably easy for the borrower to repay within the short timeline of a payday borrowing. Moreover, $255 is a round number and easy to remember. It could also be the minimum amount offered by certain lending providers.
Demographics of Payday Loan Applicants
It is hard to pinpoint a specific age group that is more likely to take out a $255 online payday loan, as anyone may find themselves in need of extra cash before their next payroll arrives.
However, studies and reports indicate that younger individuals are more inclined to use this type of credit than older people.
Statistics show:
- 60% of payday loan users are under 35 years old.
- 52% of payday loan users are aged 25-44.
- 9% of adults aged 25-29 have used a payday loan.
- Only 2% of those over 70 have used payday credits.
It is also worth noting that the highest concentration of borrowers is in the 30 to 39 age range.
Additionally, a 2020 report by Pew Trusts demonstrates that the majority of payday loan users are low-income individuals who live paycheck to paycheck. These people are more likely to have less education, lower credit scores, and more struggles such as difficulty making ends meet, difficulty paying bills, and difficulty paying off debts compared to the general population.
Circumstances that Lead to Payday Loans
While a shortage of money is the main reason for taking out a payday loan or other short-term financing, there are various circumstances that lead to payday credits. The following are some of the most common reasons why people tend to use $255 online payday loans.
Shadow of Bad Credit Score
It is well known that a poor FICO score can make it difficult for someone to obtain a traditional source of financing with favorable terms. This is where short-term loans come in as an option.
Payday loans, in turn, often don’t require credit check or have less stringent credit requirements. This means that even those with bad credit, no credit, or have recently experienced financial hardship, can still be approved for a small amount, given in the form of a payday allowance.
No Emergency Fund Available
People with lower incomes may not have the savings or assets to rely on in case of an emergency. However, life is unpredictable and it is common for unexpected events to happen. This can make people without an emergency fund more dependent on short-term loans as a solution.
Unexpected Costs
The primary purpose of payday loans is to provide instant funding for those who don’t have enough money to last until their next payroll. That’s why many customers turn to this type of financing when they need to cover various expenses, such as:
- car repairs
- rent payments
- urgent household repairs
- emergency medical or veterinary bills
- funeral expenses
Due to the urgency of the situation, people often make hasty decisions without doing their due diligence or shopping around for the best payday loan deal. This can lead to a worse financial situation and a cycle of debt.
Overdraft Fees
Additionally, $255 online payday loans are often marketed as a way to avoid overdraft fees or as a solution for existing debt. However, many borrowers use these funds to cover regular living costs, such as utilities, car improvements, food, and rent, among others.
Disclaimer: This article contains sponsored marketing content. It is intended for promotional purposes and should not be considered as an endorsement or recommendation by our website. Readers are encouraged to conduct their own research and exercise their own judgment before making any decisions based on the information provided in this article.
