According to a 2012 survey of 155 CashNetUSA customers, the number one reason why people chose to use a payday loan was to cover an ‘emergency expense,’ with approximately 18% of participants citing this as their reason for borrowing the loan. If we add in the percentages of people who said that they used their payday loan for expenses such as overdue bills, car repairs, or medical bills — then the number of people who chose to use a payday loan for an emergency expense is even higher, at around 43%. ‘Avoiding bank overdraft charges’ was a close second at around 15% — although, when grouping together all instances that a payday loan was used to avoid any type of late fee, bounced check, or overdraft charge, the percentage was actually closer to 29%.
As for why customers chose to use a payday loan over other options, approximately 37% said that they didn’t want to borrow from friends or family, around 25% said they didn’t want to overdraw their bank account and the remaining either did not want to go to a physical location, or couldn’t get a bank loan or credit card.
As one customer explains it, payday loans are there when “no one else will help out.” Multiple customers reported feeling “relieved” after using their payday loan to take care of a stressful financial situation. By providing customers with money to cover necessary costs like rent, medication, and groceries, payday loans have been able to come to the rescue, with two customers saying that the help of a payday loan was like a “weight lifted off their shoulders.”
Without payday loans, some customers would be left with no other options and backed into a corner. One customer said that they would be “further in debt with bank fees and possibly even have some major utilities turned off.” Many customers simply said they “don’t know” what they would do without the assistance of a payday loan, relying solely on these loans to cover emergency costs and other expenses.
Data and comments from CashNetUSA customer survey of 155 CashNetUSA customers, January 2012.