Do Unemployed People Use Payday Loans - OppLoans

Do Unemployed People Use Payday Loans - OppLoans Do Unemployed People Use Payday Loans?Inside Subprime: Dec 14, 2018By Nikolas WrightShort answer: Yes.How does that work?It turns out, you don’t necessarily need a paycheck to get a payday loan. Unemployed people can still get payday loans from some lenders as long as they prove some source of income: It could be unemployment, disability, or Social Security.That doesn’t mean taking out a payday loan while unemployed is a good idea. People who take out payday loans are financially vulnerable to begin with: Average borrowers make about $30,000 per year, and 58% have trouble meeting their monthly expenses.Unemployed people run a higher risk of falling into the debt trap. Unfortunately, unemployed Americans still turn to payday loans, making their finances even more tenuous.About 14% of all payday loan borrowers are unemployed, according a 2012 Pew Charitable Trusts report. That’s compared to 49% of full-time employed and 13% of part-time employed adults. About 80% of unemployed pe ople surveyed obtained their payday loans from a storefront.Payday loans are extremely risky for the unemployedIf your unemployment checks run out, that doesn’t mean your payday loan bill goes away.Generally, workers are eligible for 26 weeks of unemployment benefits from the regular state-funded programs. But it varies by state.Two weeks is the common term for a payday loan. The intent is for the borrower to pay back the loan by the next payday. But more than 80% of payday loans are rolled over or renewed within 14 days. Monthly borrowers are disproportionately likely to remain in debt for 11 months or longer, and the majority of monthly borrowers receive government benefits, according to the Consumer Financial Protection Bureau.Payday lending to the unemployed adds insult to injury. Not having a paycheck is one thing. But imagine being unemployed, borrowing a payday loan, and becoming inundated in debt.What alternative loans are available to unemployed people?If you’ve lost yo ur jobregardless if you’re collecting benefitstaking out a payday loan could spell financial ruin for you.Explore any other financial resource before taking a payday loan. It’s tough to overcome the shame of asking friends and family for money, but start there. You can also look into rent and utility assistance through government, nonprofit, or church groups.Personal loans or installment loans with a fixed repayment schedule avoid the snowballing interest of a payday loan, but still put you in debt.The best way to approach payday loans if you’re unemployed is to avoid them altogether. Come up with a budget if you’re living off unemployment benefits and seek out financial resources in your community until you can find employment.Learn more about how to protect yourself from payday loans. For more information on payday loans, scams,  cash advances, and  title loans,  check out our state and city financial guides.Visit  OppLoans  on  YouTube  |  Facebook  |  Twitter  |  LinkedI n