In recent years the payday loan market has grown hugely. Whilst regulation remains limited, many companies have been set up to take advantage of the growing demand for short term borrowing. Inevitably this has led to a sizable increase in the competition. But this has created an imbalance in many people’s eyes, which has led to questions about whether it is sustainable.

To consider whether or not the market can continue as it is currently, you have to also bear in mind the reasons for its growth. Invariably, wherever there is a huge demand for a product or service, businesses will be created or evolve in order to meet it. In the case of payday loans, the popularity was largely born out of the huge financial crisis that engulfed the world.

The consequences of the major banking collapses were disastrous for millions, as costs rose along with unemployment. With banks being unable or unwilling to offer loans as they once did, many consumers were forced to seek alternative methods of borrowing. Coupled with the instant access that the Internet affords, the conditions were perfect for short term lenders to benefit.

Those conditions of course haven’t changed a great deal. There are still millions of consumers struggling to make ends meet and the banks still aren’t lending, which means that the demand for alternatives has remained the same.

Remember, payday loan companies generally don’t discriminate against those who have poor credit, which is a massive contributing factor in the rise and rise of their popularity. Whilst some will carry out credit checks, this won’t necessarily mean that they maintain the same exacting standards that other lenders do. As a consequence, this type of borrowing is far more accessible for people from all backgrounds. So it has become a second or even first choice for many borrowers.

Just like in any market, competition is essential. Whilst there will always be some companies who are able to secure the majority share, by having multiple businesses all competing for custom, it helps to ensure that the industry is able to effectively regulate itself. After all, if one company was to begin offering payday loans at a hugely discounted rate, then others would need to match this; otherwise they would be left behind and customers would almost certainly go elsewhere.

There will always be a point at which the market will become saturated, and it is at this time that newcomers will struggle to make an impact. However, this saturation point will only ever be reached when the demand peaks, which doesn’t appear to be imminent.

Whilst payday loans are seen as an alternative to conventional lending, there aren’t yet any significant alternatives to this form of short term borrowing. Unless this is created, either by the banks or an entirely different source, then payday loans will continue to thrive thanks to all the factors mentioned above. People want a swift and accessible borrowing option, one which offers cash within hours, not days and is available at any time. The fact that short term lenders are able to offer this means that they have a natural competitive advantage.

Whilst the media have been generally negative in its portrayal of the payday loan industry, the regularity of the coverage has helped to improve awareness amongst the general public. This has only helped to increase applications to record levels, so hasn’t worked to deter people.

So despite negative press and substantial growth in the number of companies operating within the industry, the payday loan market is stronger than ever. With the financial climate remaining largely unchanged for the foreseeable future, it certainly wouldn’t be a major surprise to see it continue to develop and strengthen even further.

Vincent Rogers is a finance writer who writes for a number of finance businesses. For payday loans, he recommends Paydaypower.co.uk

Vincent Rogers is a finance writer who writes for a number of finance businesses. For payday loans, he recommends http://Paydaypower.co.uk

Author Bio: Vincent Rogers is a finance writer who writes for a number of finance businesses. For payday loans, he recommends Paydaypower.co.uk

Category: Finances
Keywords: payday loans, same day loans, loans, UK, finacne