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Strategic Management of High-Cost Short-Term Credit: Payday Loan Analysis
Strategic Management of High-Cost Short-Term Credit: Payday Loan Analysis
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BTCCSquare news:
The U.S. consumer financial landscape is sharply divided between prime and subprime markets. While prime borrowers enjoy low-interest rates and flexible terms, subprime borrowers—often unbanked or underbanked—rely on high-cost payday loans to cover emergency expenses or income gaps. Approximately 12 million Americans use these loans annually, marketed as short-term solutions but frequently trapping borrowers in cycles of debt.
Payday loans, designed for lump-sum repayment upon the next paycheck, often escalate costs beyond the principal borrowed. This structural flaw perpetuates financial instability rather than alleviating it. The industry’s reliance on volatile income streams underscores systemic inequities in access to affordable credit.
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