I came across an article on The Motley Fool ("Payday Lending’s Not Dead Yet"), which made a case for investing in payday lenders. According to the article, all the recent financial reforms taking place with traditional lenders such as banks and credit card companies may drive more business to the payday loan industry. People who are tight on money but can’t get a traditional loan because of strict regulations may have no other choice than to take out a cash advance.

If you’re not familiar with payday loans, it is a type of short-term loan that does not require a credit check. In essence, a person pays off the loan on their next payday and the interest rates are generally pretty high. Most lenders simply require an ID, an active checking account, and proof of employment.

I personally would have never thought of investing in a payday lender, but after reading the article, I guess it could make for a sound investment. It’s a pretty big industry that continues to grow. Nowadays there many companies who are even offering online cash advances so people can apply for a loan from the privacy of their own home.

I haven’t done any research on exactly how to go about investing in the payday loan industry, but I’m assuming that as with most industries there are companies that accept private investors. Other companies are public, so you will have to go through a brokerage firm or mutual fund company.

As with any investment you make, it’s important to do your due diligence to ensure that you’re investing in a company that aligns with your personal values and goals.

Photo Credit:  Andrew Bain