Payday Loan Alternatives, Advice for Borrowers to Consider
By Paul RizzoPayday Loan Writer
As The Akron Beackon Journal states, many consumers get caught in a “debt trap” when they take out a payday loan — or multiple payday loans — to make ends meet.
Here are some alternatives and tips, provided by the Federal Trade Commission, Better Business Bureau, Ohio Department of Commerce and Summit County Office of Consumer Affairs:
• Be sure you know the cost of the no faxing payday loan and that you can pay it off on time.
• Beware of lenders who offer quick cash through the Internet or classified ads. They might not be properly licensed to make loans in Ohio and the offer could be a scam.
• When you need credit, shop carefully. Compare offers. Look for the credit offer with the lowest APR. Consider a small loan from your credit union, an advance on pay from your employer or a loan from family or friends. A cash advance on a credit card might also be a possibility, but it might have a higher interest rate than other sources.
• Ask creditors for more time to pay your bills. Find out what they will charge for that service.
• Make a realistic budget and avoid unnecessary purchases.
• Build some savings - even small deposits can help - to avoid borrowing from online payday advance companies for emergencies, unexpected expenses or other items.
• Find out if you have, or can get, overdraft protection on your checking account. Make sure you understand the terms and fees associated with your plan.
• If you need help working out a debt-repayment plan with creditors or developing a budget, contact your local consumer credit counseling service.
• If you must use a pay day loan, borrow only as much as you can affordto pay with your next paycheck and still have enough to make it to the next payday.
• Try your own financial institution. “A lot of people may even qualify for loans through their banking institutes, or credit unions but don’t approach them first,” said Cynthia Sich, director of the Summit County Office of Consumer Affairs.
• Check with a credit union or bank to see if there are alternative products to cash advance loans.
About 20 credit unions with the Ohio Credit Union League have begun offering a program called “Stretch Pay,” with more joining. Locally, they include Seven Seventeen Credit Union, with branches in Brady Lake and Canton, and the Kent Credit Union, with branches in Kent, Ravenna, Streetsboro and Kent State University.
KeyBank in Cleveland has piloted a check-cashing policy for nonclients, in which the bank will cash a check at lower rates than payday cash advance lenders or cash-checking centers.
The fee is 1.5 percent of the check with a minimum charge of $3 and maximum of $22.50. In comparison, a local cash-checking business takes 3 percent of checks up to $300 and 1.5 percent of checks over $900.
