Rising costs of living, such as grocery and fuel bills, mean money has to stretch even further, and some households are finding they just can’t take the strain. Sometimes, the only solution people might be left with is taking out a short-term loan, such as a pawnshop loan. But is this a good idea? BadCredit.org wanted to gauge people’s relationship with short-term loans, specifically where people lean on cash loans most often.
First up, the people who are most likely to access short-term cash reside in Miami. In second place was Las Vegas where there’s a casino on every corner, and perhaps people have been placing just a little too much on red. In third place came Atlanta, a city that still has a pretty substantial wealth divide.
Nine other Florida cities, Orlando (ranked 6th), Jacksonville (21st), St. Petersburg (22nd), Coral Springs (36th), Hollywood (48th), Tallahassee (58th), Cape Coral (59th), Miramar (84th), and Hialeah (100th), are also notable for having residents who are among the most likely to rely on short-term loans, and pawnshop loans in particular.
The top 10 were as follows:
#1 Miami
#2 Las Vegas
#3 Atlanta
#4 Buffalo
#5 Philadelphia
#6 Orlando
#7 Houston
#8 Chicago
#9 Detroit
#10 Dallas
BadCredit.org also asked Florida respondents which short-term loans they preferred to access, and found that payday loans emerged as the most popular. The next most popular was a pawnshop loan, followed by a loan from friends and family. The least favored option for accessing cash fast was a car title loan.
When it comes to pawnshop loans specifically, the study revealed that of those Florida respondents who have accessed short term loans, 29% of them have raised cash via a pawnshop loan previously.
The survey found that the primary reason for considering or using a short-term loan was an unexpected expense. Nearly half of respondents (46%) cited this as the reason, such as a car repair or a medical bill. More than a third said they needed the extra money for essentials, such as rent or groceries. And 19% said they needed the money to tie them over in case of a financial emergency or job loss.
Perhaps unsurprisingly, the speed of receiving funds when choosing a short-term loan was cited as being ‘extremely important’ for 70% of people surveyed. Only 4% of people surveyed said speed wasn’t important to them at all.
Interest rates are, of course, the most challenging factor when deciding on a short-term loan option, with 41% of respondents citing this as the main reason they would take their time considering it; after all, no one wants to pay more than they have to.
Approximately 27% said they were worried about the repayment terms, some of which can range from unrealistic to unhealthy. 17% were worried about the risk of losing their collateral, such as a car or valuables. A further 9% were concerned about the loan term length; after all, no one wants to keep paying something off 20 years later.
BadCredit.org’s survey also found that nearly half of respondents (44%) think the short-term loans with the most reasonable terms overall are payday loans because you can pay the sum back when you actually get your wage packet. Nearly a third (32%) favor pawnshop loans, while 24% think title loans have the most reasonable terms.
And finally, when it comes to the impact of short-term loan services in communities, nearly half of those surveyed (45%) said it is mostly positive.
‘In an ideal world, people wouldn’t need short-term loans at all,’ says John Mcdonald, senior editor at BadCredit.org. ‘However, sometimes people just don’t have a choice but to borrow money to get them through a rough patch. We would always recommend people read the small print and try to understand what you are signing up for, and how much you’ll eventually have to pay back.’
Source: BadCredit.org
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