Payday Loans Market Size, Share & Trends Analysis Report By Type, By Marital Status, By Customer Age, By Region, And Segment Forecasts, 2021 To 2028

The global payday loans market is expected to witness significant growth over the forecast period. The increasing awareness about payday loans among the young generation and the aggressive adoption of the latest, advanced technologies by payday lenders are anticipated to drive the growth of the market over the forecast period. Payday loans, which are also called check advance loans or cash advance loans, envisage a type of short-term borrowing, whereby payday lenders offer immediate short-term credit at very high interest rates. The working principle behind payday loans is typically based on the portion of the customer’s next paycheck, and the interest rates are often based on the customer’s income. A payday loan allows borrowers to issue a post-dated check for the payday salary to the payday lender and receive part of that payday amount in immediate cash from the payday lender. Getting a payday loan is easy as the eligibility requirements for obtaining payday loans are very limited. For instance, the borrower must be 18 years old or above, must be employed, and must possess a driver’s license and a bank account. These limited requirements make a large number of customers eligible for a payday loan approval. The growing awareness about payday loans and the rapid payday loan approvals without any restrictions on usage are expected to drive the growth of the global market over the forecast period.

Payday Loans Market Segmentation

Payday loans are getting popular among the young generation as young people are confronting more financial instability as compared to any other generation. It is estimated that one-third of the population between 25 and 34 years of age have a student loan, which is the key source of debt among the members of Generation Z. As a result, the young generation is opting for payday loans, which are easy to obtain, thereby driving the growth of the market.

However, the outbreak of the COVID-19 pandemic is expected to have a negative impact on the payday loans market. Consumer spending is plummeting as several individuals have either lost their jobs or are facing pay cuts in the wake of the outbreak of the pandemic, which does not bode well for the growth of the market.

Several venture capital firms are focusing on investing in payday lenders. For instance, in December 2018, Earnin, a financial platform provider, announced the close of a USD 125 million round of equity financing from Andreessen Horowitz; DST Global; Matrix Partners; Spark Capital; Coatue Management, L.L.C.; March Capital Venture Management Services, LLC; and Ribbit Capital. Earnin, which allows individuals with a bank account and a job to get paid the minute they leave work, was looking forward to utilizing the funding to make the financial platform and its app available for customers in North America.

The key players in the payday loans market include CashNetUSA; Cashfloat; Lending Stream; Creditstar; Silver Cloud Financial, Inc.; Myjar; THL Direct; Speedy Cash; TMG Loan Processing; and Titlemax. These market players are pursuing various growth strategies to cement their market position and increase their market share. For instance, payday lenders are focusing on offering triple-digit balloon payment loans and are effectively expanding their products to offer installment loans for shorter tenures. The growing popularity of payday loans and the absence of any major market entry barriers are also encouraging other lenders to consider a market foray.