With many Americans suffering financially due to COVID-19, the payday lending market is exploding with new requests for loans. The world has completed changed since COVID-19 hit at the beginning of 2020. We have experienced first hand just how quickly things change during a global pandemic. With the loss of income, increased health care costs, and supply expenses, American’s financial health is a prime example of this roller coaster.
The largest economic stimulus package in American history was signed by President Trump, and an unbelievable 6.6 million Americans applied for unemployment benefits in a single week. A survey conducted by Lendedu.com revealed that more consumers have dipped into their savings to cover expenses and are more concerned about retirement.
With both large and small businesses shutting down and the economy heading towards a recession, the U.S. has seen a surge in unemployment in the wake of COVID-19. In the weeks since that survey mentioned above, 10 million Americans have filed jobless claims. The rising unemployment trend is a major concern to the consumer economy because Americans without jobs will stop spending money.
- 12% of Americans have lost their jobs due to COVID-19
- 24% of Americans have seen no changes to their job compared to 35% the first time.
- 13% have been furloughed compared to 11% two weeks ago.
While some banks are considering new loan options intended to help Americans through the COVID-19 coronavirus crisis, these may not be available for months, as is the norm for traditional bank implementing anything new, and could only be available for borrowers with reasonably good credit scores.
People who need quick cash to cover their expenses while they wait for government assistance are likely to turn to short-term loans – and if they have bad credit or no credit, this likely means that payday loans are their only option. Low- and moderate-income people, and particularly women and people of color, have been hit hard by the pandemic. The country has seen huge job losses and, in turn, losses of income. The Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, the $2.2 trillion stimulus bill the president signed into law in March, did a lot to keep people afloat for a while during the pandemic — it tacked an extra $600 a week onto unemployment insurance through July and entailed a $1,200 stimulus check to most Americans last spring. But now much of the stimulus has dried up, and people still have bills to pay. They’re going to have to figure out a place to turn.
Sadly, the US congress cannot seem to come to an agreement on a second stimulus package, and last week President Trump called a halt to all talks until after the election. Many people were counting on another boost of $1200 to their dwindling pocketbooks, but now who knows if and when that will happen, if ever.
This lack of support from the government for those desperately needing quick cash will continue to explode the payday lending market. While many industries are suffering due to the COVID-19 coronavirus pandemic, it’s likely that most payday loan companies will come out of this crisis without any major problems. Although some physical loan offices may be closed, the industry as a whole will continue processing applications and lending to Americans who need quick cash and is likely to remain relatively strong throughout this crisis, since most payday lenders offer online loans.
Payday loans have always gotten a bad rap over the years, but it is looking like now is their time to shine. This competitive, regulated market ensures that customers have the confidence in sound financial products and services that enable them to make ends meet, whether it is groceries or everyday expenses incurred by their families. There is nothing more important right now than having access to money for many people in America who need it to survive these trying times.
MoneyThumb has many private lenders who use our best-selling product PDF Insights to make quicker and smarter lending decisions. A lot of these lenders offer payday loans. We are happy to be able to report that our customers in this niche are providing a service to consumers that would otherwise go unmet.