It has been found through a survey by PEW Charitable Trust that almost 73% of cash advance and small loans are received through storefront offices of lending agencies. And, a mere 16% of Americans tend to trust online transactions. Where is the gap here? What are the factors that push towards such a skewed percentage? Despite the fact that online cash advance takes mere minutes to process and transfer, the market statistics do not corroborate the facts. The underlying demographics are a good place to start with, in answering the above questions.
At first glance, an online cash advance is a perfect way to apply for short-term personal loans without needing to visit a bank or a storefront office. But, considering the fact the borrowers tend to come from the ‘Unbanked’ population of the US who account for these loans, the answer might be not that obscure.
Online Cash Advance as an Alternative Credit Option
There are various types of cash advance loans you can find at a typical lending agency. They are listed as follows.
- Payday Loans
- Installment Loans
- Title Loans
- Line of Credit
All the above are easy online cash advance loans that can be obtained both with and without collateral, and both with and without a good credit score. Several good websites can be used to find a list of all lending agencies that operate in the US which suit your needs. Using a piece of query and basic info like annual income, credit score, loan amount, these tools will give you a list of verified lending firms.
As with all other lines of credit, an online cash advance is a better option in several scenarios. As already mentioned above, bad credit is a factor for many. As per statistics, the average annual income of the borrowers comes between $30,000 per year. If we compare it with statistics from CNBC, the median middle-class income in America is about $45,000 at the least to $135,000 for a household. This is the figure for a middle-income family and that means a constant struggle with making the ends meet, sending kids to college and so on. Therefore, the demographics that depend on online cash advance practically use it as a second line of credit in case of an emergency.
Difficulties that Borrowers Face Online
For the demographics that are not tech-savvy, physical interaction is much more trustworthy. Despite these online cash advance facilities being so much hyped, the idea for a daily-wage worker who is not adept with internet and online transactions, a storefront office where you get to meet a real person and get money in cash is a generously trustworthy bet. This is still OK when considered the exorbitantly high-interest rates some states have on these short-term loans.
- Despite the rates, vary with the loan amount, type of payment, the term of deposit and more, some states in the US are quite a debt trap for borrowers than others.
- Polls by the Center for Responsible Lending, states like Texas, Oklahoma, LA, Kansas, and NE are debt traps that have interest rates of the order of 400% to 660%.
This means the fear that online cash advance can make them clueless as to what is happening with their money is constant.
Future
However, the trend is changing very slowly, which is hopeful. An online cash advance has all benefits but is perceived to be a little less trustworthy than storefront offices where borrowers can deal with their savings and get the assurance of a legitimate transaction. Borrowers prefer to use offline methods rather than sit on a computer or a smartphone figuring out cyber-threats and do(s) and don’t(s) of online transactions.