A recent study indicated that an astounding 63 percent of United States citizens don't have enough money in their savings accounts to cover a relatively low-cost emergency of just $500. Around 12,000,000 Americans regularly use payday loans, of which virtually all belong to that 63 percent.
Understanding These Meaningful Statistics
While the overall unemployment rate in the United States hovers around 10 percent, this factor doesn't take into consideration people that aren't actively looking for jobs. The first statistic shown -- the one that shows about 63 percent of Americans don't have enough money for basic emergencies -- is far higher than the total amount of Americans without jobs. Most recent statistics from St. Louis's Federal Reserve Bank indicated that just under 60 percent of the entire population of our great nation is employed.
It's easy to interpret that most Americans' financial situations aren't optimal. To aid hard-working employees, some companies have started to adopt payday loans as a part of benefit packages, those including 401k matching plans, pensions, and insurance coverage.
The One Benefit Every Employer Should Invest In
A vast majority of business startups in the United States are headquartered in California, particularly the San Francisco Bay Area. Employee Loan Solutions is based in nearby, sunny San Diego, an organization that offers payday loans as a part of employee benefit packages.
Doug Farry founded Employee Loan Solutions in early 2015, spreading word about his innovative new service the is bound to improve employee satisfaction, as well as helping them live better lives. The organizations is partnered with a financial institution in cold, cloudy Minnesota to provide affordable payday loans to employees.
Payday loans are short-term personal loans that provide cold hard cash to struggling Americans in return for hefty fees. Most of these exorbitantly expensive, unarguably unfair financing agreements cost at least 400 percent APR, sometimes ranging up to 780 percent annually.. Their repayment periods often last for only two weeks, further jacking up interest costs.
Making Sense of Payday Loans' Exorbitant Costs
For example, let's say a company's hard-working, long-time employee needs $800 to cover immediate expenses for her family, but has no way to come up with the money. She visits a payday loan company and takes out a payday loan for $800. The loan's repayment term is marked at 14 days, no more than two paychecks from her employer. At only 400 percent APR, which is relatively low for payday loans, she'll owe at least $861 after two weeks. If she can't satisfy the debt within 14 days, even more interest accumulates. This often results in a never-ending cycle for working-class Americans.
Employee Loan Solutions helps businesses' employees obtain loans ranging from 1,000 to 3,000 dollars. Because they're designed to help people, rather than wreck their financial positions, loans are extended to virtually everybody who applies. While many short-term personal loans -- called "payday" loans because their providers earn substantial "paydays" when debtors get paid -- charge interest through the roof, Mr. Farry's organization only charges 24.9 percent per year.
Not 24.9 percent per two-week period, per month, or quarterly -- 24.9 percent per year.
Companies realize that many employees do engage in payday loan activity. However, failing to provide reasonable short-term personal loans in benefit packages causes their workers to live lives filled with stress, worry, and financial ruin.
Employee Loan Solutions can afford charging such low interest rates because employers handle advertising, rather than Doug Farry's company itself. Payments are taken directly from employees' checks, rather than spending time, effort, and resources towards debt collection. Mr. Farry's business model is kind to working-class employees in financial need.
Public companies, private employers, and government agencies around the United States have all included payday loans in their repertoires of employee benefits.