Friday, August 17, 2012

A Brief History Of Payday Loans

People have been taking out Payday Loans, albeit perhaps not in their modern form, since biblical times. Short-term loans have always been a popular option for people in search of small sums of cash quickly. Payday Loans in their modern form however, can be traced back to the 1920's and the Depression era, when a great number of consumers lost faith in the banking system and when employer's began paying employees by cheque rather than in cash. Seen as many banks in this period were not willing to take on low-income consumers, many people opted for cheque-cashing stores. These stores would cash a cheque in return for a fee.

As people began to regain their faith in the banking system, cheque cashing began to decline in popularity. As such, it was time for the cheque cashing industry to diversify and this is when numerous enterprising individuals began offering short term loan options as a form of consumer credit. These became known as salary advances, and broadly replicate the payday loan as it is in the modern day.

The real revolution in the Payday Loans sector, however, came with the advent of the Internet. The Internet essentially revolutionised the way in which Payday Lending firms could interact with borrowers, and this was particularly the case from the early stages of the 21st Century and onwards. By setting up a web-based firm, Payday Loans Companies could avoid the high-level of expenditure required to set-up a chain of stores and the high-costs associated with hiring tens, or maybe hundreds, of employees.

Consumers could now apply for a loan from the comfort of their own home and, what's more, receive a decision on their application in a matter of minutes. The Payday Loan industry has expanded from essentially nothing in 1990 to a billion industry in the modern day. The surge in popularity of this form of consumer credit is unparalleled.

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