The household budget is very much like a normal business. The income side offsets the expenditure side. Unfortunately, in many households there is a dynamic deterioration of financial liquidity due to the use of only one source of income, e.g. an employment contract. In the article, you will learn about the most important debt needs of domestic households and see why it is difficult to meet key life needs without a loan.
Households usually use short-term loans (payday loans) to meet basic consumption needs, as well as to settle basic bills, e.g. for utilities, mobile phones, the internet. Other most popular expenses are renovations, usually small, for individual rooms. Short trips abroad as well as specialist (emergency) treatment are also financed with loans. Payday loan is a great opportunity to use the promotion, e.g. in the category of technological products. The payday loans are used eagerly by the Y generation, so it is not surprising that they are interested in smartphones, laptops, and even gambling or discount hunting. Payday loan is a good product because the contract does not indicate the purpose of spending. You get cash for any purpose. Thanks to this, the short-term loan is an opportunity to meet some needs outside the standard household budget. The most popular amounts of payday loans are USD 500 – 2000. There are rarely more funds due to higher commissions. The larger and longer the short-term loan, the more expensive the money. This is a standard rule in the operation of private loan companies.
A good assumption is the use of credit in investments, e.g. in securities, corporate bonds and currencies. Thanks to high rates of return on investment, you are able to pay installments and earn extra money. In a sense, short-term loan is paid leverage. With limited monthly income, you spend much more once, which allows you to react quickly to any economic crises. It is interesting to pay attention to payday loans and cooperation with parabanks, because access to cash, even slightly more expensive, is very desirable, regardless of the circumstances.
In weaker or emerging economies, issuing cash loans for ordinary consumer needs or for securing household liquidity is a sign of society’s great weakness in terms of generating additional income. In the best economies, cash loans are usually converted into luxury goods. However, the country’s cash loan market is undergoing transformation. This is a product addressed not only to the poorest or financially excluded, but to the so-called Generation Y, young people encouraged to consume virtually all social development channels.