The deep dive: Payday Loans Market

By Puja Sharma

The deep dive’ is our bi-weekly exploration of a relevant topic, hot trend, or new product. For Prime subscribers only.

How does it work?

The payday loans market size is expected to grow by USD 8.4 billion from 2021 to 2026. The market is estimated to be progressing at a CAGR of 4.34%, as per the Technavio market research report. North America is estimated to account for 42% of the market’s overall growth. Market growth in North America is estimated to be slower than the growth of the market in APAC.

The growth of the market can be attributed to factors such as the increasing awareness about payday loans among the youth and the aggressive adoption of the latest and advanced technologies by payday lenders. Hence, such factors boost the market growth in the region during the forecast period.

Who is under the radar?

Payday Loans Market: Market Dynamics

Payday Loans Market: growing awareness regarding the payday loan among the youth to drive growth. The growing awareness regarding the payday loan among the youth drives the growth of the market during the forecast period. Almost one-third of people aged 25 to 34 have a college loan, making it the largest source of debt for Generation Z members.

Due to the growing cost of living throughout the world, students with college loans are under enormous pressure to repay their debts, and most young people are turning to the online payday loans market.Furthermore, the debt forces individuals to seek for payday loans to obtain quick and simple loans, fueling the fintech industry development.  Hence, such factors boost the growth of the market during the forecast period.

Why does it matter now?

Rising Number of Payday Lenders

The rising number of payday lenders is an emerging trend shaping the market during the forecast period. Payday lenders gain prominence, and more lenders are following them and entering the financial sector. This is because it is so simple to start a lending business such as loans. Various payday lenders provide triple-digit balloon payment loans and expand their offerings to include installment loans for shorter terms which will propel the FinTech business.

Moreover, due to numerous policies that promote payday lenders, more lenders were prepared to enter the global payday loans market during the pandemic to provide loans to financially insecure people. Hence, such trends boost the growth of the market during the forecast period.

The payday loan market research report segments the payday loans market by type (Storefront payday loans and Online payday loans) and geography (North America, Europe, APAC (Asia-Pacific), South America, and the Middle East and Africa).

The market share growth by the storefront payday loans segment will be significant during the forecast period. All the extra costs, such as processing costs can be eliminated by the storefront payday loans. The major factor for the adoption of storefront payday loans by customers is the customer dealing directly with the payday lender, where the customer is assured that the lender abides by your state’s payday lending regulations. Hence, such factors drive the segment growth during the forecast period.