Payday loans have been around for a number of years in one form or another. If you are interested in getting a payday loan, you might want to learn a little bit about these loans and how they got started in the first place.
The first payday loans were given out in the U.S. back in the 80s as a result of interest rates becoming deregulated. Because there weren’t the kinds of rules and regulations on rates back then that there are today, many lenders saw a great opportunity to make a lot of money.
The Lending Revolution
Short-term loans have been around for many years, but payday loans were somewhat of a game changer in that they dispersed funds to qualifying applicants extremely fast. It wasn’t until payday loans became a thing that people could get money for emergency expenses within as little as 24 hours. Over the years payday loans have grown significantly in popularity. It is now a £billion industry because of the sheer umber of people who are getting these loans each year.
Landmark court decision paves way for Payday Loans
It all started back in 1978 when the Supreme Court made a landmark decision that allowed national banks to charge interest rates according to state law rather than any federal regulations. Federal deregulation had a major affect on a wide range of businesses, including banks/lenders. It didn’t take long for lenders to start offering short-term, high-interest loans to people in desperate need of quick cash.
The Internet‘s role
As the internet started becoming increasingly popular in the mid 90s, payday loan lenders found a much easier and more streamlined way to make these loans available to the masses. With so many of these lenders setting up websites to allow people to apply for payday loans online, they became more popular than ever before. It was now no longer necessary for most people to physically go down to a business to get a payday loan, which was a huge deal at the time.
A vast majority of these lenders were eager to jump onto the internet bandwagon because of how much easier it made it for them to get customers. This technological revolution played a huge part in making payday loans the titan of the banking industry they are today. Payday loan lenders started popping up all across the nation and in many other countries all over the world.
It also became common for lenders to operate outside of the U.S., as there were far fewer regulations to hinder their businesses. The U.S. has been known for its strict stance on banking regulations for some time now, so it seemed obvious for many businesses to go this route.
Mainstream Banks and Payday Loans
Believe it or not, traditional banks have actually played a pivotal role in the ubiquity of payday loans. One of the ways in which the banks encouraged the further development of payday loans is by allowing ACH withdrawals without any hindrances. Suddenly bank customers were allowed to halt payment on ACH transactions.
International popularity of Payday Loans
Payday loans have become extremely popular in many places outside of the U.S., including the United Kingdom. In fact, the U.K. was one of the first places in which lenders decided to start offering these loans after it was clear they were quite lucrative in the U.S. There have since been a number of laws and regulations put into place regarding payday loans, but that hasn’t stopped lenders from offering them.
Why payday loans have become so common
There are a number of things that have contributed to the popularity of payday loans, including how quickly people can get the funds they need. Many of the people who apply for these loans need quick cash for some sort of emergency expensive.
Payday loans provide qualifying persons with a way to get the money they need without all of the delay and red tape that is associated with other kinds of loans. Another reason why these loans have enjoyed such great success is because they don’t require you to have great credit to qualify, though the requirements do differ depending on the lender.