What You Should Know About Payday Loans
Are Payday Loans The Stopgap To Your Financial Woes?
Hard times call for desperate measures. As it happens, most people are shoved into the financial jam by the nasty economy, hence, many people would do almost anything just to rise from the economic rubble. And one of these “anything” is payday loans. Also known as paycheck advance, a payday loan is a small, short-term loan that is meant to fund the expenses of a borrower until the next payday.
Payday Loans Take The Flak From Critics
The reputation of payday loan companies are not as sterling as the noble intention of the loan itself. This type of loan has been tarnished by controversy as it has been considered by critics to take advantage of the financial hardship of a person for profit and is seen to bleed the low-income individuals, who are the targeted market of such loan, dry. They also rail against the aggressive advertising and collection practices of payday loan companies. As a result, the government has intervened to safeguard consumers against rip-offs, although laws related to this vary from state to state. An example of a law protecting consumers against abuse with payday loans is that a lender can only apply industry standard collection practices that are employed in the collection of other debts. A good number of payday loan companies, however, require borrowers to issue post-dated checks to the lender. The check bounces if the borrowers have insufficient funds in their checking account, making them vulnerable to the lenders’ threat of filing criminal charges for check fraud. Borrowers must realize that this collection practice is actually against the law in many states.
Payday Loan Companies’ Secrets Revealed
Thinking of getting a payday loan? Review these revelations from a former payday loan call center manager:
- They sidestep the various regulations limiting interest rates by exacting various fees. The mean Annual Percentage Rate on a payday loan is estimated to be over 600 percent! They bury this fact in the fine print.
- You can always ask for a fee discount or payoff extension. Call them to make a complaint and you are sure to get one.
- They gather as much borrowers’ contact details as they can. They intend to use such information to harass and locate them when they fail to pay.
- Payday loan companies make money by taking advantage of poor people who fall into the payday loan pit.
- Read the fine print on the loan contracts, although they have included a great volume of it that not even all of their employees know what they state. This is to discourage you to read it.
- Their statistics show that the regular payday loan borrower would find himself paying more than twice the amount of the original loan before he can completely pay off the loan.
- If you have a payday loan or planning to get one, make sure to settle it immediately. Extending the loan will make you pay more fees and will make you more vulnerable to becoming buried in the payday loan pit. The extension will not work for you in any way. On the contrary, it will just add up to your fee amount due.