Millennials Depend on Payday Advance Loans to Deal with Expenses
There are a lot of articles getting published online about Millennials. Not familiar with this term? It is a word that is used to describe people born between 1982 and 2004. Many of the articles about this generation of people that have gone viral have been about a generation of lazy, entitled people. As is usually the case with these types of narrow views, most of these millennial-based pieces are nothing but website content that is designed to get plenty of page views, comments and shares on social media outlets. The fact of the matter is that millennials, like other younger generations over the years, face challenges that older people are often not familiar with.
A new survey came to the conclusion that about 42 percent of Millennials take out payday loans, auto title loans, made use of a pawnshop, purchased something rent-to-own or got tax refund advances over the past half-decade. The use of these alternative financial service providers does seem to indicate that the younger generation is having some issues dealing with traditionally challenging financial scenarios.
According to the President of Your Greatest Contribution, “Taking out payday loans or auto title loans is a very dangerous practice and can leave the lendee in more financial harm than good. If you read the very fine print, according to the Consumer Financial Protection Bureau (CFPB), the cost of the loan (finance charge) may range from $10 to $30 for every $100 borrowed. A typical two-week payday loan with a $15 per $100 fee equates to an annual percentage rate (APR) of almost 400%. By comparison, APRs on credit cards can range from about 12% to 30%. In the long run, if the lendee is not able to pay back the loan in full, they may end up paying back more in fees than they borrowed.”
Despite this information, experts have been quick to note that Millennials are having a more difficult time making ends meet than some might expect. A researcher from Price Waterhouse Coopers and George Washington University, “Millennials confront greater difficulties — including economic uncertainty and student debt — than those who came before them. As a generation carrying new personal responsibility, it is critically important for Millennials to be on a path leading toward financial security.”
Like every other generation of young adults, Millennials have had to learn to deal with major financial struggles. One of the most prominent money battles that Millennials find themselves fighting is the battle against educational debt. More people are pursuing higher educations, and that is a great thing. But having to deal with ever-increasing amounts of student loan debt is no fun. Studies have found that about 2/3 or Millennials have at the very least one long term debt that they are working on repaying. For some these debts are student loans, for others they are mortgages or car payments. Among the Millennials with college educations, a whopping 81 percent have at least one long term debt to contend with.
Unlike other articles out there that seem to have no goal other than to insult Millennials, we are going to close this piece out on a high note. Yes, the younger generation will have to face seemingly insurmountable financial challenges. But knowing that this generation is also one of the most educated of all time, we have to believe that the young American consumers of today will rise to any challenges that come their way. Debt and financial struggles are never easy, but barring another huge financial meltdown, Millennials should be able to get on top of things if they practice sound financial habits in their day-to-day lives.
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