Introduction

Payday loans and similar short-term loan products are an important credit instrument for millions of Americans. As the regulatory framework for these small-dollar, high-interest loans takes shape in the United States, it's become increasingly important to understand the needs of borrowers and the effects of the payday lending industry on these financially vulnerable consumers.

PaydayR connects the millions of Americans who need payday loans each year with a comprehensive database of licensed and regulated lenders. When financial shortcomings strain a family's budget and present the very real threat of delinquency, service disconnects or even eviction, quick and easy access to payday loans online can be the essential lifeline to make a difference.

Payday loans afford borrowers with a quicker and more accessible alternative to the traditional financing offered by big banks. With no more than a checking account and proof of income, nearly anyone in the US is eligible to receive as much as $1000 in as little as one day. The industry's shift to an increasingly online presence has also extended the lead payday lending has over larger financial institutions by facilitating instant application approval without the need for paperwork or waiting periods.

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This study seeks to measure the circumstances borrowers face when seeking short-term financing, as well as both the short-term and long-term impacts on the borrowers financial well-being.

Current studies have found that without access to small-dollar credit markets many consumers will fall short of their financial obligations, which commonly results in penalty fees, interruption of essential services, and lasting credit damage. When used responsibly, payday loans can have an overall positive impact on the borrower's financial standing, but in some cases the borrower isn't provided with the necessary resources to make an informed decision.

America's unbanked and underbanked consumers represent the largest segment of payday loan users. In cases where payday lending isn't available, the leading alternative forms of financing for these consumers are to pawn personal belongings or borrow money from friends and family. In this study, we hope to gain additional perspective on these influences and outcomes -- specifically in the context of the developing regulatory framework of the payday lending industry.

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