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Payday Loan Consolidation Becomes Enemy Of Small Banks
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Payday Loan Consolidation Becomes Enemy Of Small Banks

It is no surprise that many payday loan lenders love the recent explosion in popularity of their services. Many lenders have been able to make a huge profit over the course of the last few years because there are so many people who need short-term money. More importantly, the number of payday lenders has also increased greatly as well. The increase is particular to small banks, credit unions, and other institutions that have historically not allowed such loans. However, the lucrative aspects of the industry are making many institutions change their opinions and attitudes toward the practice.

Why Small Banks Hate Payday Loan Consolidation

The availability of payday loans in the past few years has been caused because of the increasing demand that Americans are showing. This cycle has made many lenders quite rich, but the threat of loan consolidation has really started to irritate lenders. Many of the lenders are happy to be able to get some money out of customers that might otherwise just declare bankruptcy. However, the consolidation process is helping many borrowers get out of mountains of debt at rates that are not as profitable for the small banks, credit unions, and other financial institutions.

Nonetheless, the banks are going to have to get used to the payday loan consolidation so long as the industry continues to grow. Over the course of the next few years there are supposed to be 37% more lenders than there are today.

How This Affects You

The biggest problem with more lenders is that the temptation to borrow money is even greater than before. You will be faced with lenders wherever you go, which means you can technically borrow from many different lenders.

This is one of the easiest ways to fall victim to what is called the payday loan trap. Many of the people fall victim to this trap because there are so many lenders willing to offer money without much of a background check. People use many lenders to pay for something and then have debts to every single individual payday loan company. There are ways that people can get out of the debt by means of a payday loan consolidation even when they are faced with an increasing number of lenders. The main approach that is used is to get a payday loan debt settlement and get out of the debt cycle completely. Once all costs with the lenders are negotiated, its best to avoid getting another payday loan. Otherwise you will be using one to pay for another for years to come.

Street Talk

Hello David, good article. I have seen a large amount of Car Title and Pay Day Loan businesses popping up all over in many cities and rural areas. It sickens me that these "fellow" humans enjoy making a profit from strapped citizens. The Car Title places should be outlawed, people sometimes do not really read the fine print and do not realize that their car can be taken after say five oclock the same day that they miss a payment, you handed over the title so you are out of luck. Your article was well written and gave infomation that I didn't realize, the fact that people were going to many pay day lenders most out of desperation and have to pay huge interest rates, The fact that there is "no credit check" makes sense. They are not doing this as a gesture of good faith but instead are bringing more people into debt for their greedy purposes. Regards, April

  about 9 years ago

Excuse me if I don't feel too bad for those small banks. :) Pinned

  about 1 decade ago

I don't think anyone does ;)

  about 1 decade ago

Great article, It's a crazy state of affairs in the world, to much debt, and everyone seems to be drowning in it.

  about 1 decade ago

Thanks Ty! And yes your quite right about that. I just deal with the worst of worst in debt for people ;)

  about 1 decade ago
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