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2021

Payday Loans Market

Payday Loans Market Size, Share, Competitive Landscape and Trend Analysis Report by Type, Marital Status and Customer Age : Global Opportunity Analysis and Industry Forecast, 2021-2030

BI : Financial Services

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Author's: Pramod Borasi| Shadaab Khan | Onkar Sumant
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Payday Loans Market Outlook - 2030

The global payday loans market size was valued at $32.48 billion in 2020, and is projected to reach $48.68 billion by 2030, growing at a CAGR of 4.2% from 2021 to 2030. A payday loan is a short-term unsecured loan, often characterized by high interest rates. This allows borrower to write a post-dated check to the lender for the payday salary, but receives part of that payday sum in immediate cash from the lender.

Payday-Loans-Market-2021-2030

Furthermore, it’s easy to get approved as there are very few requirements such as borrower must be 18 years old or above and have a job, driver’s license, and a bank account, these few requirements make larger number of people eligible for approval. 

Growing awareness about the payday loan among the youth population and fast loan approval with no restriction on usage boost the growth of the global payday loans market. In addition, presence of large number of payday lenders positively impacts the payday loans market growth. However, factors such high interest rates and negative impact of payday loans on credit score are expected to hamper the market growth. On the contrary, rise in adoption of advance technology among the payday lenders is expected to offer remunerative opportunities for the expansion of the market during the forecast period.

On the basis of type, the storefront payday loans segment dominated the payday loans market share in 2020, and is expected to maintain its dominance in the upcoming years owing to growing adoption of storefront payday loans among the developing nations of Asia-Pacific and LAMEA region. In addition, the online pay day loans segment is expected to witness highest growth rate in the upcoming years, owing to its varied advantage which include faster processing speed, easier payment system and minimal paper work.

Region wise, the payday loans market was dominated by North America in 2020, and is expected to retain its position during the forecast period. This is attributed to number of factors such as penetration of new payday loans among the youth and improvement in economy. In addition, presence of large number of payday loan vendors across the U.S. and Canada is expected to provide lucrative opportunities for the market. However, Asia-Pacific is expected to witness significant growth during the forecast period, owing to wide presence of large number of payday loan enterprises, which are turning toward digital solutions to efficiently manage their business processes, particularly in developing countries such as China, India, and Singapore.

The report focuses on growth prospects, restraints, and trends of the global payday loans market analysis. The study provides Porter’s five forces analysis to understand impact of various factors, such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers, on the global payday loans market share.

Segment Review

The global payday loans market is segmented on the basis of type, marital status, customer age and region. By type, the market is divided storefront payday loans and online payday loans. By marital status, it is categorized as married, single and others. As per customer age, the market is bifurcated into less than 21, 21-30, 31-40, 41-50 and more than 50. Region-wise, it is analyzed across North America, Europe, Asia-Pacific, and LAMEA.

Payday Loans Market
By Type
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Online segment is projected as one of the most lucrative segments. .

Competitive Analysis 

The key players profiled in the global payday loans industry analysis are Cashfloat, CashNetUSA, Creditstar, Lending Stream, Myjar, Silver Cloud Financial, Inc., Speedy Cash, THL Direct, Titlemax, and TMG Loan Processing. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.

COVID-19 Impact Analysis

The global payday loans market is projected to decline in the COVID 19 situation owing to millions of people are unemployed and facing financial hardship as payday are only available to employed person with a source of income. In addition, decrease in various payday loans government schemes and decline in support from different NGOs supporting the unemployed and low earners negatively impacts the growth of the market. 

For instance, according to a report by California Department of Financial Protection and Innovation in 2020, California saw a 40% decline in payday loans as compared to 2019, a drop equivalent to $1.1 billion. Almost half a million fewer people didn’t rely on payday loans, a 30% drop compared to 2019. This was attributed to California’s new $262.6 billion budget, with multiple programs aimed at reducing economic inequality within the state with an unprecedented $11.9 billion spent on Golden State Stimulus payments.

Payday Loans Market
By Martial Status
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Single end-users segment accounted for the highest market share in 2020.

Top Impacting Factors

Growing Awareness about the Payday Loan among the Youth Population

Payday loans are gaining popularity among the youth as young people today are experiencing more financial instability than any other generation. In addition, it is estimated that one-third of all adults aged between 25 and 34 years have a student loan, which is the primary source of debt for members of Generation Z. This is forcing them to apply for payday loans for fast and easy loans, which is driving the growth of the market. Furthermore, due to Trump administration’s CFPB proposal of putting an end to a rule that protects borrowers from loans with interest rates of 400% or more, payday lenders have started focusing on young population with attractive digital advertisements. Moreover, according to reports from Citizens Advice, up to 4 in 10 young adults will use a payday loan at some stage or another. In addition, with the rising cost of living across the globe, students who have education loans are under huge pressure to repay their debts and many youngsters are trying for online payday loans market, which is driving the growth of the market.

Large Number of Payday Lenders 

Payday lenders are gaining attraction and many lenders are following them and entering the business as it is very easy to enter. In addition, as many payday lenders that offer triple-digit balloon payment loans and are expanding their products to offer installment loans for shorter term drives the growth of the market. Furthermore, due to various regulations supporting payday lenders, more are willing to enter during the pandemic situations to provide loans to the financially unstable people, which propels the growth of the market. 

For instance, The Consumer Financial Protection Bureau (CFPB) under President Donald Trump, has weakened the consumer protection that applies to protect people who are not able to pay loans from taking any type of loan. However, with the removal of the bill, payday lenders are freer to target anybody with high interest loans and indulge them in further deeper loans. Thus, this is increasing the growth of payday loans. Furthermore, with the rising number of competitors, the loans are becoming more diverse and more affordable but still expensive as compared to any other type of loan, which is expected to drive the growth of the market in the upcoming years.

Payday Loans Market
By Region
2030
North America 
Europe
Asia-Pacific
LAMEA

Asia-Pacific would exhibit the highest CAGR of 6.1% during 2021-2030

Key Benefits For Stakeholders     

  • The study provides an in-depth analysis of the global payday loans market forecast along with the current trends and future estimations to explain the imminent investment pockets.
  • Information about key drivers, restraints, & opportunities and their impact analysis on the global payday loans market trends is provided in the report.
  • Porter’s five forces analysis illustrates the potency of the buyers and suppliers operating in the industry.
  • The quantitative analysis of the market from 2021 to 2030 is provided to determine the market potential.

Payday Loans Market Report Highlights

Aspects Details
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By Type
  • STOREFRONT PAYDAY LOANS
  • ONLINE PAYDAY LOANS
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By MARITAL STATUS
  • MARRIED
  • SINGLE
  • Others
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By CUSTOMER AGE
  • LESS THAN 21
  • 21 TO 30
  • 31 TO 40
  • 41 TO 50
  • MORE THAN 50
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By Region
  • NORTH AMERICA  (US, Canada)
  • EUROPE  (UK, Germany, France, Italy, Spain, Netherlands, Rest of Europe)
  • ASIA PACIFIC  (China, India, Japan, South Korea, Australia, Rest of Asia Pacific)
  • LAMEA  (Latin America, Middle East, Africa)
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Key Market Players

SILVER CLOUD FINANCIAL, INC, CASHFLOAT, THL DIRECT, LENDING STREAM, TMG LOAN PROCESSING, MYJAR, CREDITSTAR, CASHNETUSA, TITLEMAX, SPEEDY CASH

Analyst Review

Adoption of payday loan has increased over the years as payday loans are providing cash to people in need for money at high interest rate that should be returned in 1-2 weeks or on the date of pay check of the borrower. In addition, with the fast approval of the loans without any proof of spending it is attracting many youngsters who are borrowing money for entertainment purposes, which is driving the growth of the market.

Furthermore, according to a survey in 2019, it was found the majority of the students with education loans have taken payday loans at least once to repay the education loan, which is enhancing the growth of the market. Moreover, rise in adoption of advance technology such as AI, business intelligence among the payday lenders to automate the application process and target more customers who are most likely to take payday loans is providing lucrative opportunity for the market.

Key providers of the global payday loan market such as CashNetUSA, Lending Stream, Silver Cloud Financial, Inc., and TMG Loan Processing account for a significant share in the market. Furthermore, payday lenders are growing at a fast pace as payday loans can have interest rates over 600%, more and more lenders are entering this market to earn more money at fast pace. In addition, with rise in payday lenders the rate of workers taking payday loans tripled as a result of the pandemic, which enhances the growth of the market.

For instance, according to a recent survey by Gusto of 530 small business workers, about 2% of these employees reported using a payday loan prior to the start of the pandemic, but about 6% used this type of loan since March 2019. This increase in payday loans drive the growth among small earners. Moreover, due to high cost of interest many payday borrowers are unable to repay the loan and take another loan for paying the small amount, which is providing lucrative opportunity for the market.

Furthermore, even though payday loan is said to be an emergency loan, but majority of the borrowers are using it for daily uses and not for emergency use. For instance, according to Pew Charitable Trusts in 2020, most payday loans in the U.S. are used to cover regular expenses like utilities, credit card bills, food, rent, or mortgage and only about 16% use them for unexpected expenses such as car repair or medical emergencies. Moreover, with the reducing trust in payday loans with 3-digit interest, many borrowers are fearing to take another new payday loan, so to increase the trust in payday loans, some payday lenders are agreeing with government bill to standardize interest rate. For instance, in March 2021, Illinois Governor JB Pritzker signed into law Senate Bill 1792, which will cap interest at 36% for all payday loans. In addition, it applies to a wide array of businesses, and voids any contract that exceeds the rate cap. This protects borrowers from any unanticipated high interest and save from long loan sequences.

Thus, number of such developments across the globe is driving the growth of the market. According to the industry experts, the payday loan market is expected to witness increased adoption in the coming years, owing to rise in improved payday loans to manage the various unexpected expense or emergencies and growing awareness about the benefits of payday loans among the youth. North America is expected to dominate the market during the forecast period, while emerging countries in Asia-Pacific and Latin America are projected to offer significant growth opportunities.

 

Author Name(s) : Pramod Borasi| Shadaab Khan | Onkar Sumant
Frequently Asked Questions?

The Payday Loans Market is estimated to grow at a CAGR of 4.2% from 2021 to 2030.

The Payday Loans Market is projected to reach $48.68 billion by 2030.

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Factors such as high interest rates and negative impact of payday loans on credit score drives the growth of the Payday Loans market

The key players profiled in the report include Cashfloat, CashNetUSA, Creditstar, Lending Stream, Myjar, Silver Cloud Financial, Inc., Speedy Cash, THL Direct, Titlemax, and TMG Loan Processing, and many more.

On the basis of top growing big corporations, we select top 10 players.

The Payday Loans Market is segmented on the basis of type, marital status, customer age, and region.

The key growth strategies of Payday Loans market players include product portfolio expansion, mergers & acquisitions, agreements, geographical expansion, and collaborations.

subsegments of Customer Age are less than 21, 21-30, 31-40, 41-50 and more than 50.

Online Payday Loans segment will grow at a highest CAGR of 5.7% during 2021 - 2030.

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Payday Loans Market

Global Opportunity Analysis and Industry Forecast, 2021-2030