Why do college students need payday loans?
Like many other people, college students can’t define the reason and time when a sudden financial issue would arise, and they need instant money. Practically, college students don’t have the means to save as much as common people can do. This situation makes them vulnerable to craving urgent hard cash. This is why students need cash loans. Payday lenders provide loans with zero collateral so it becomes easier for college students to get payday loans without any hassle.
Why do college students like payday loans?
Online payday loans can be popular among college students because payday loan lenders don’t consider credit scores while giving the loan. College students normally have low credit scores. That’s why they do not belong to the risk-free zone to the traditional loan lenders. So, if you’re a college student with a bad credit score, the most certain and easiest option to get a cash loan for students in applying for payday loans.
How many students are using payday loans?
As per the results of a survey on payday lending, CNBC confirmed that a significant proportion of college-aged students know the payday loan industry. The survey includes over 3,700 individuals. Among those people, more than 38% are between ages of 18 to 21, which means Generation Z. These people strongly believed in taking out a payday loan. The other 11% of Gen Z would prefer to take out payday loans to meet their college expenses. Apart from that, 8% of people aged 18-21 had taken out a high-interest payday loan in the past 2 years.
How can college students repay loans?
Students should pay back payday loans with interest. In the case of illegal payday loans, they have to pay off only the principal amount; the lenders can’t take any step against them legally. But where the payday loan is legal, they should pay off the principal at full interest. If they don’t pay it back within the due date, a massive amount of interest will be charged and it will increase the debt amount further.
Students may opt for any side hustle to earn more and pay off the debt. These part-time jobs are good to meet the basic expenses, but the students usually have little chance of saving for a financial crisis. On the other hand, they may also ask their parents for monetary help.
Most college students pay off their payday loan debt by saving money from their college expenses, earning from side-hustles, and the salary from any part-time jobs.
#The process of getting payday loans from college students
The process of getting a payday loan is easy. As per CFPB (Consumer Financial Protection Bureau), most payday lenders only require students to meet a few conditions to qualify for a payday loan. Students must have active checking accounts, some sort of income proof, valid identification, and must be 18 years or above. College students have to follow the standard procedure to get a payday loan. If they are looking for urgent cash, they need to fill out forms online to apply for a payday loan. There you have to upload all the required documents and sign a contract. You have to read all the terms and conditions before signing the contract.
Once the agreement is signed and uploaded, the lender will process the documents. After the assessment, usually within a few hours, the lender would transfer the money to the borrower’s account.
The borrower (college student) will be notified of a deadline to make the debt payment with interest. Many lenders provide special offers while approving payday loans for students. These are options like money back in installments, as they know students do not have a fixed income every time.
How students can get out of payday loan debt
Here are the ways to follow if teens want to get rid of payday loan debts:
- Check your total debts together: When teenagers are trying to pay off debts, they should focus on the amount, interest rates, and due dates. Payday loan interests are quite high; so teenagers should consider paying them off first and as soon as possible.
- Target high-interest payday loans as per due dates: You must figure out how much you owe in total, to whom, and by when you must pay them off. You must target high-interest payday loans first and prepare a list as per their payment dates.
- Take help through a credit union payday alternative loan: Credit unions often provide small, cheap loans called payday alternative loans (PALs). Teenagers may need to become a member for one month to opt for payday alternative loans. Credit unions may also offer loans for students from $200 to $1,000. The tenure to pay off the loans is one to six months.
- Borrow from your dear ones: If you are struggling with payday loan debt, then, first of all, you must avoid taking out any more payday loans!
Another option to arrange money for making payday loan payments is asking for help from your family, friends, or any other person who trusts you. You may borrow from your friends, your parents, and your relatives. But remember, borrowing money from friends and family is risky. You’ll be putting your relationship at risk and borrowing money. If you borrow from them, make sure you have a written agreement of the terms and conditions and repay the loan on time as promised.
If you’re a college student who is desperately looking for a payday loan, there are a few things you must remember. As a student, you must avoid such financial steps that can lure you towards debt. It is wise to use such a loan when you do not have any other options left. Many college students use payday loans for unnecessary reasons. And later, such students end up paying the high interest again and again. So, think twice before opting for such an option.