A popular survey group, the Dosh Express, has identified official statistics from 2010 on the public’s view of payday installment loans. Representatives from Dosh Express have found these figures to be an interesting reflection of the service provided by the payday loan market and believe they demonstrate a largely positive attitude toward short-term borrowing in the UK and even here in the US.
In a consolidated survey and report of Dosh Express with Consumer Finance Association (CFA), a trade association representing many payday lenders of loans with no credit check, one member payday installment loan company disclosed the following statistics from customer research carried out in November 2010:
1. 86% of clients would recommend payday installment loans to a friend
2. 96% think payday installment loans with no credit check are convenient way to obtain cash quickly
3. 93% found customer service to be helpful and easy to understand
4. Overall customer satisfaction is 94%
In a separate market study of the Office of Fair Trading from the year 2009 up to June 2010, published in its Review of high-cost credit Final report OFT 1232, the following are some statistics from the report:
1. 94% of customers of payday installment loan with no credit check come from a household with at least one full time worker
2. The vast majority of customers of loans with no credit check, more than 75% of them, are over the age of 26
3. Most payday installment loan customers are between the ages of 26-45
With this statistics, it can be deduced that almost a million people have turned to high cost payday installment loans with no credit check to cover their mortgage or rent, bank overdrafts, other bills or even credit cards. Payday installment loans with no credit check are small, unsecured loans marketed as a way for people to tide themselves over until their next paycheck. These loans attract those struggling with their credit scores because of consistent denial of loans from traditional lenders.
The only problem with these loans with no credit check is that they come with very high interest rates and consumer advocates argue that their high cost means poor borrowers get sucked down into a cycle of debt and end up taking out additional loans to repay their existing ones. But despite of this risk, many borrowers are still satisfied with the financial service and are willing to take out another loan if approved again.
Borrowing from payday installment loans with no credit check is a hard practice to break, especially if people have become dependent on these loans for their urgent needs. The most beneficial way for the government to help is to strengthen consumer protection against predatory practices of lenders of loans with no credit check and stipulate laws that regulate the extent of payday lending. The statistical figures provided by Dosh Express, CFA, and the Office of Fair Trading can be a guide for our legislators to secure the welfare of consumers of loans with bad credit so that they can avail services of these short-term loans without fearing any harm from being burdened further in debt.