Payday Loans will lead you to Bankruptcy!
It's hard to ignore the need for "fast cash". I like many other people, have gone through tough financial times and was in need of temporary relief. But, it is my position that payday loans do more bad then good. Some things you probably don't know about payday loans are the following: (1) the finance amount is almost half as much as what is borrowed, (2) the loans range from $100 to $1,000. (3) There are thousands of payday loan stores (20,000) in the US. (4)Payday loan users are more likely to file for bankruptcy then those who have been turned down for a payday loan.
Other states like New York have taken a hard stance against payday loan collectors. The State of New York has deemed payday type loans to be "usurious". In order words, the interest rates of the pay day loans are so high, New York considers such high interest rates to be unlawful. In Arkansas the attorney general is suing payday lenders who give loans through the internet at interest rates exceeding 500 percent.
PAYDAY LOANS (pay day, pay-day, cash advance, cash-advance collections): Payday loans, or cash-advance centers are, in my opinion, predatory lenders. If one takes the time to look at the terms of these loans, they would see that the lender is charging you extra fees, higher interest and expect you to not be able to pay off the loan completely. Payday lenders want consumers who need cash fast, and those consumers do not consider if a payday loan is a good or bad investment.
Next time you're driving down the street and see a payday center, notice that these loan centers are located in lower to moderate-income neighborhoods. You will see these stores located next door to a liquor store or a pawn shop.
Bottom line is that these loans are bad. Taking out a payday loan is a terrible financial decision. Here are some of the reasons why payday loans may lead one to bankruptcy:
- Payday loans ridiculously high interest rates
- One Payday loan, turns into multiple payday loans because consumers generally get another loan to pay off the first loan
- Payday loans are in the business, "in my opinion" of taking advantage of people who already struggle financially. It's better business to keep customers coming back for more, so payday loan centers loan out more money, instead of encouraging consumers to pay off their debts.
- Payday loan centers will rather have consumers make small payments, and increase the total owed at the end of the day. Thus, creating a vicious cycle of borrowing and paying debt.
- Payday loans are their own collector. This means that payday loan centers are not subject to the FDCPA (Fair Debt Collection Practices Act). Therefore, payday loan centers may call you repeatedly, send you collection letters, call you at all times of the night, call you at work, and even physically come to your house. The protections of the FDCPA do not apply to payday loan store, payday lenders do not have to verify your debt, or stop calling if you request in writing that they do so. They can and will mislead you about the laws to try to scare you.