Aside from being a valuable source of loans for consumers, the industry of bad credit loans, popularly known as payday loans, has significant economic benefits in the United States. This is according to a study conducted by the IHS Global Insight, a company that works to provide comprehensive information on the economic and financial situations of various regions and countries. Global Insight’s comprehensive study revealed that the industry impacted both the country’s gross domestic product (GDP) and labor income, contributing about $10 billion in the U.S. GDP and around $6.4 billion in labor income. Global Insight added that the industry has also contributed over $2.6 billion worth of taxes, which significantly affected the country’s economy.
All these findings apparently contradict all those groups and individuals claiming that the industry is bound to stifle economic growth, and that it exists to prey on the less-fortunate, low-income urban and rural communities. For instance, earlier this year, the PA House Committee recently passed a bill that legalizes payday lending in the state of Pennsylvania. Not all, however, were happy about the bill, saying that it is a debt trap to struggling families, and that the bill is troubling, not just from an economic standpoint but from a moral perspective as well.
Despite all those oppositions from various individuals and groups, not just in Pennsylvania but in other states as well, bad credit loan lending continues to exist, and is growing in a rapid and steady pace. In fact, many economists believe that it is not a threat to the economy. Also, given the fact that the job market is deteriorating and that the credit card industry is having sort of a midlife crisis, bad credit loan lenders can be of big help.
The industry also defends itself from all criticisms by saying that a bad credit loan is the best and least expensive option for millions of Americans looking to solve their financial situations the fast way, and also adding that the economic reality these days is that people regularly need cash to help them get through their next paycheck.
It does seem that this type of loan has proven itself to be beneficial in almost everything, from providing consumers instant cash during emergencies to making great contributions to the country’s GDP. And importantly, with over 23,000 payday lenders across the country that employ around over 70,000 people, there’s no doubt about the industry’s contribution to labor income.
Bad credit loan industry may continue to receive criticism, primarily because of the associated costs that include interest rate, which are indeed expensive compared to regular or traditional type of loans, but certainly there are no faster or simpler options for consumers looking for emergency cash. With bad credit loans, consumers won’t have to wait for days and weeks before they can get their loan money. And especially when another hurricane had hit the country, affected communities will certainly need emergency funds for car repair and to fix their houses. The bad credit loan industry is once again proving its worth by extending easier and faster options to people hit by the devastating storm.