A paycheck to a paycheck triggers a loan application

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When we think of those struggling between paychecks, people who earn six-figure incomes usually don’t come into play. But PYMNTS research continues to find that an alarming percentage of well-paid people do not succeed financially from check to check.

This is one of the many important revelations from the September edition of Reality Check: The Paycheck-to-Paycheck Report: Personal Loans Help 36M Paycheck-To-Check Consumers Stay Afloat, a PYMNTS and Loan Club collaboration.

See also: Reality Check: the paycheck to paycheck report

As this latest opus indicates, “a third of these employees live from one paycheck to another, in fact, and 12% have difficulty paying their bills. These individuals also account for 32% of the demand for personal loans in the United States, according to our latest findings. “

Living paycheck to paycheck attracts more of these top incomes to loan products that can help balance personal financial balances, allowing them to catch up and even get ahead of some debt ( student loans stand out), as our most recent survey of American Consumers shows.

According to the new study, “24% of consumers in the United States have used personal loans. This makes it the second most popular type of unsecured credit product after credit cards (used or acquired by 73%) and the fourth overall lending instrument after auto loans (50%) and mortgages (45%). . . “

See also: Reality Check: the paycheck to paycheck report

A collection of contributing factors

Noting that “the prevalence of live paychecks among personal loan users suggests that personal loans have become a common financial tool for Americans, with paycheck-to-check consumers accounting for most of the demand, ”the September edition of Reality Check states,“ Americans’ credit needs fluctuate with changes in their circumstances and their ability to prepare for the unexpected.

A critical set of factors distinguishes lifestyles from paycheck to paycheck, with the presence or absence of children in the household becoming decisive for many who have financial problems.

According to the latest study, “28% of respondents living in households with children have taken out personal loans, which is a third more than those who do not live with a child (21%). Paycheck consumers who live with one child are again about a third more likely to be personal loan users (32%) than their counterparts in childless households (25%). These trends also apply to other credit products. Consumers living with one child are on average 31% more likely to have taken out some other type of loan, such as a home equity product.

See also: Reality Check: the paycheck to paycheck report

Both savings and profits are telltale indicators

Other factors influencing borrowing to cover living expenses include things like rent and mortgage payments, as well as personal savings – or lack thereof.

The September edition of Reality Check points out that “the level of savings strongly influences consumer demand for personal loans,” with 53% of personal loan users surveyed reporting less than $ 2,500 in savings, “suggesting that they are financially vulnerable to emergencies or job loss. ”Some 46% of the average sample belong to the low savings group.

The fact that high incomes are among those who live paycheck to paycheck is somewhat shocking, although it is clear that a large number of high income people do not report having problems with income. money.

“High-income consumers tend to apply for fewer personal loans on average, as 36% of all respondents qualify for this group, while only 32% of personal loan users earn that much,” according to the study. The reverse is true for the middle bracket, which holds a lower share of the general U.S. population (31%) than personal loan users (36%). It should also be noted that consumers in the bracket lower income levels do not represent a disproportionate share of the demand for personal loans, despite more limited resources. ”

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NEW PYMNTS DATA: SELF-SERVICE SHOPPING ROUTE TODAY – SEPTEMBER 2021

On: Eighty percent of consumers want to use non-traditional payment options like self-service, but only 35 percent were able to use them for their most recent purchases. Today’s Self-Service Shopping Journey, a PYMNTS and Toshiba Collaboration, analyzes more than 2,500 responses to find out how merchants can address availability and perception issues to meet demand for self-service kiosks.


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