Payday Loan Questions and Answers
By J.J. CameronPayday Loan Writer
A recent article in The Daily World deals with these inquiries.
As gas prices soar and families look to take expensive vacations, we're entering a time of year where people often find finances especially tight. Consequently, the use of faxless payday loans is often considered. They seem so easy!
Through the internet, telephone, mail and television, we get bombarded with offers of “fast cash regardless of credit.” These pitches are usually from lenders whose tactics could be considered “predatory.”
To help you avoid these traps, the publication asked its housing counselors, Royce Travis and Julie Galligan, to answer some questions on predatory payday advance lending.
Q: I’m often out of money before the end of the month, so I go to one of those check-cashing places. Now I go there at least once a month, but it seems like I just keep getting further behind. Help!
A: Using “payday loan” or “check cashing” companies can lead to dependency. After paying back the initial loan, you find yourself broke and so you take out another loan to feed the family and pay bills.
Though the "quick cash” seems harmless (pay $56 for borrowing $200) the following information might make you think: Calculated on an annual basis, the interest rate you paid on the $56 fee is 730 percent!
If you find yourself frequently needing cash between paydays, it’s time to establish a budget to help maximize the use of your funds so payday loans are not necessary.
Q: What kinds of things are defined as “predatory lending?
A: Predatory lending is defined as a transaction that is not what the borrower expected and is usually targeted toward people with lower incomes. Homeowners with substantial equity and seniors are usually the targets for these offers.
To avoid this trap, be wary of telemarketing or door-to-door offers that guarantee cash loan approval regardless of credit. Reputable lenders rarely solicit business in these ways.
Read the fine print! The most common reason folks get into trouble is their eagerness to get funds and their failure to read the fine print. If the faxless payday advance lender won’t allow you to take the paperwork away from their office so you can have someone else review it, run!
