Beneath their uniforms, military personnel are also people. They do not differ from civilian men and women when it comes to financial needs. Yet, they are more favored by some lenders who consider them to be less risky. You must have heard of payday loans. Many civilians frequent payday lenders to meet financial emergencies. There are also some military personnel who take out payday loans although theirs are termed "military payday loans."
What are Payday Loans?
Payday loans are mostly in small amounts ranging from $100 to $1,000, just enough for people to meet their particular emergencies. Payday loans are normally granted only to people with regular salaries because risks are kept to a minimum when there is a steady source of income. Since the loan amount is small, the borrower is expected to pay it back shortly, usually on the coming payday. Depending on the negotiation between borrower and lender, repayment period can be extended for two more months or even longer.
Profitability of Military Payday Loans
Lenders granting military payday loans are more profitable than their brethren lending to civilians. Their success can be attributed to the nature of their customers -- the military personnel. Men and women working in the military receive a fixed monthly salary. They earn more than the civilian employees with a minimum wage of about $1,500. Because of the regularity of their income, they have the capability of repaying small loans on time. Lenders regard them as very desirable customers because of their willingness to get payday loans without care for the high interest rates. They do not wince even if the interest reaches 400%. Military personnel have a better repayment record than civilians. They are prompt in paying their bills and are known to really work hard so they can pay off all their obligations. For lenders, nothing can be better than military payday loans.
There is no doubt that payday loans can be helpful to some of the military personnel. However, this loan product makes the military men and women vulnerable to abuse by unscrupulous lenders. There are even allegations that some military men are forced to pay interest at 800%. As such, this concern is made one of the many that were addressed by the Fiscal Year 2007 Military Authorization Act.
For more information about loans for military personnel and to learn more about the Fiscal Year 2007 Military Authorization Act, be sure to download our NEW E-Book: Military Loans: Important Information About Loans For Military Personnel