History of Paycheck Advances

- How did Paycheck Advances get Their Start? -

Throughout the world, the paycheck advance industry is enourmous and growing larger everyday. It wasn’t always this way though, in fact, only in the past fifteen years has the industry seen such exponential growth. Paycheck loans essentially started up in North America around the 1920’s. During this time, the United States was going through a dramatic financial depression, one that could actually be on the verge of returning. Americans had lost faith in their country’s banks and other financial institutions, leading to the rise of independent check cashing businesses. These stores were popular for check cashing, but also began to expand their business, offering small loans that covered people until their next paycheck. As the American economy improved and banks earned back their credibility, fewer people made use of the check cashing stores. However, they managed to live on through their salary advances, which were popular with customers and profitable for lenders. Who could have guessed that these early check cashing stores would be the founders of a multi-million pound industry?

The Rise of the Paycheck Advance

It’s unclear when exactly paycheck advances began to take off around the globe, but most would estimate that it started sometime in the 1990’s. While cash advances existed in some form for many years earlier, a growing world wide economy and increased convenience helped the industry expand tremendously. Early paycheck advance industries knew they could provide the ultimate convenience to customers in offering quickly approved loans with no credit check required. It meant that just about anyone was capable of taking out a cash advance and they could do it in just minutes. With the internet’s inception just getting started, the paycheck loan industry was about to take on a massive growth spurt.

Paycheck Advances Today

From it’s modest beginnings in North America, few expected the paycheck advance industry to grow and expand to the extent it has today. With the development of the World Wide Web, the industry was able to take its business online and reach more customers than ever. Offering cash advances online ushered in a new age of convenience – customers could literally borrow money without leaving their home. The internet also allowed lenders to conduct their business digitally, which required fewer employees and resources, leading to higher profits.

A Cloud over the Industry

Although paycheck advances are extremely popular today, the industry’s outlook isn’t all bright and sunny. Irresponsible borrowing and poor lending practices by certain businesses have cast paycheck advance businesses in a negative light. Around the globe, countries have begun placing strict regulations on cash advance industries. In the UK, the Office of Fair Trading has even begun making investigations into some paycheck advance businesses. Fortunately, it hasn’t stopped the industry from growing. As long as lenders continue to offer convenient loans with reasonable rates, payday lending should have a bright future ahead.