Are Payday Loans Affected by COVID-19?
Payday loans are usually short-term financial lending services that offer sums of about $500 or less. These loans are typically due when you receive your next paycheck and have hefty lender fees. With the advent of COVID-19, many people were forced into difficult financial situations and turned to payday loans to help them pay for rent, food, and other essentials.
There are plenty of loans for any situation you can imagine. However, most of those offers are only available to you if you fulfill specific requirements and have the time to wait for your application to get processed. Such loans are helpful when applying for long-term necessities but may not be suitable when you need money today for car repairs to ensure you get to work and get a salary.
Many Americans live in unbanked or underbanked communities, meaning they don’t have a lot of access to day-to-day banking options. For people in these areas and those in urgent need of funds, payday loans are the best option.
During the Pandemic
COVID-19 influenced communities around the world in 2020, affecting people and their businesses. With stores and schools closing, many people found themselves short on money and no one to ask for assistance since everyone was in the same situation. At the start of the pandemic, thousands of people would apply for bank loans. The lengthy process made these loans competitive, and few people succeeded in getting the monetary aid they needed. For many, their only option was to apply for a payday loan.
Payday lenders only require proof of income and bank details to process a loan. The loan recipient usually receives the money they need on the same day when the application was submitted. Quick processing and easy-to-meet requirements made payday loans especially useful during the pandemic. Payday loans ensured that people were able to pay for essentials and get through the crisis.
Were Payday Loans Helpful During the COVID-19 Outbreak?
The pandemic allowed lenders’ businesses to skyrocket and thrive as they became the only option for many communities. In fact, payday lenders have expanded their offerings by introducing low-rate, small-dollar loans of under $50 to those dealing with hardships. Some even changed their policies from a strict plan regarding overdue payments to examining applications on a case-by-case basis. This allowed payday loans to assist more people overall by ensuring they could pay off their debts with less stress.
The COVID-19 pandemic affected many aspects of people’s daily lives, one of which was their ability to pay for essentials. Payday loans were the answer to those affected. The value of an accessible lender soared during this time. And for a good reason – payday loans helped those in need.