Payday Loans

5 Reasons How “Easy” Short-Term Cash Advances Turn Into Horrible Payday Loan Harassment

The majority of consumers who borrow short-term cash advances often end up becoming a victim of payday loan harassment. However, it is important for you to understand that the horror starts right form the moment when you miss the due date for the repayment. But, even if you repay the loan in time, it is going to be very costly to you. For a $300 of cash advance taken for 14 days, you may have to pay over $100 just in the form of interest and other fees. This is just an example; things can be more horrible than this. Failing to make the repayment in time can make your debts double, or sometimes even more. If you get the loan extended for a couple of months, you are into deep, deep trouble. Following is a brief rundown on how “easy and instant money” turns into a huge mountain of debt.

Extremely Expensive Lending Programs With Triple Digit APR

Payday lending companies charge interest on short-term cash advances at a triple-digit rate. The rates can be anywhere from 150% to 600%, or sometimes even higher. Besides that, there are several hidden expenses as well, such as processing fee, verification fee, check bouncing fee, late fees, and others. Though a few states are now coming up with new laws to protect consumers from payday loan harassment, the majority of states still have no laws to regulate this type of predatory lending in an effective manner. Sixteen states, in an attempt to save its residents from the horrors of payday loans, have either banned this type of lending practices completely or have enacted low rate cap on short-term lending.

The Risk Of Getting Trapped Into A Viscous Cycle Of Debt

When you fail to repay in time, your loan is generally automatically renewed for one more month, which means you will have to pay interest for 30 more days at a triple-digit APR. Just one rollover can push you so much deeper into a viscous cycle of debt that you may not be able to find out a way to get out of it. However, it is important for you to keep in mind that many states now do not allow automatic rollover of payday loans if the borrower fails to make the repayment on the set due date. Some states have even made it mandatory for the lenders to work out an affordable repayment plan for the borrower in small monthly installments without charging extra. What is more, some states have also put a maximum cap on how much collection fee payday lenders can charge. But, if you are not aware of those laws, the lenders will keep on taking undue advantage of your ignorance.

Payday Lenders Target Poor Consumers Through Aggressive Marketing

Consumers who suffer from payday loan harassment are usually the ones who earn limited monthly salary and live paycheck to paycheck. When these types of people are hit with even temporary financial emergencies (such as an unexpected medical bill, car repair, or home improvement), especially during the second half of the month when the paycheck is still a couple of weeks away, they start looking out for easy cash, and this is how they get trapped into the “lucrative” offers made by payday loan companies. These companies do aggressive marketing to popularize the concept of short-term cash advances, which are in reality a form of predatory lending. When you need money urgently and you find someone offering you instant cash in your bank account within a matter of just a few hours through a very simple process of faxless or no-doc payday loans, you are very much likely to fall for it, especially if you have bad credit score because these companies also advertise that they do not check your credit score in order to determine your eligibility for these loans. They offer loans to almost everybody because they KNOW how to get it back. They are very aggressive debt collectors.

Payday Loan Companies Are Very Aggressive In Their Debt Collection Practices

Though Fair Debt Collection Practices Act applies to payday lending also and there are lots of laws to protect consumers from payday loan harassment, it is often very difficult to use those laws practically against payday lenders, especially if it is an online company. Most of the companies that offer this type of loan programs do not want to be regulated by laws and they are always on a look out for loopholes on how to trap consumers in viscous cycle of debts so that they can make profit out of it. It is not a matter of surprise how payday lending has turned into a multi billion dollar industry within a span of just five to six years while thousands of consumers have ended up getting bankrupt because of these loans. It is an unfortunate reality that most payday lenders are engaged in unfair practices. Therefore, you are strongly recommended to try better alternatives and never take payday loans. Payday loans are often advertised as “your friend in need”, but they are actually “your enemy in disguise of a friend”. If you are already trapped into payday debt, you should do a thorough research to find out whether your lenders are charging you illegally or violating your legal rights. If so, you can file a complaint against them with your state authority. If needed, get help from an expert attorney who specializes in this field of law.

They Mislead Consumers By Showing Them A Lucrative Picture

The false lucrative picture that payday loan companies show to consumers prepares the base for payday loan harassment. Payday loans are often advertised as easy loan programs with very simple eligibility criteria. Even people with bad credit can qualify for it very easily. The application process is completely hassle-free, as there are no or very few paperwork. The approval comes within an hour. Consumers are often tempted to sign up for such loan programs because of these lucrative statements. What the payday loan companies never tell you is the horror of the story on how you are going to be in deep debt trouble if you fail to repay the loan on its set due date.

It is important for you to keep in mind that in some states, the laws have also restricted the number of payday loans you can take at a time or the total number of loans you can take within a year. It is important to note that if a lender provides you a loan despite the fact that you had already reached your quota of maximum number of loans, you will only be liable to repay the principal amount of money without any interest or penalty charges. The similar provision is also applicable in cases where you find out at a later stage that the lender is not even duly licensed to offer this type of lending program. Overall, your awareness about your legal rights and the laws in your state is crucial when it comes to protecting yourself from payday loan harassment.

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Posted in Payday Loans, Risk Factors | 1 Comment »

One Response to “5 Reasons How “Easy” Short-Term Cash Advances Turn Into Horrible Payday Loan Harassment”

  1. Matt says:

    Short term pay day loan proves to be long term harassment for the people who go for this option to get some instant relief in financial crisis. The victims of such type of loans come from a poor background. They depend upon the monthly pay check to meet their financial needs. Once they get trapped in this cycle of pay day loan, it becomes impossible for them to get out from it. The most crucial factor about this program is that they come with a very high rate of interest, that’s why the little amount of loan converts into a huge amount in a very short period of time. If some body takes a short term loan and finds his/ himself unable to repay an installment, the loan will be renewed for another time period and you have to pay more interest. Just one default payment can prove to be very costly for you because it is very easy to get pay day loan but becomes nearly impossible for a salaried person to repay the debt in time. If you are trapped in the debt of pay day loan, then you have to face harassment calls from the collection agencies.

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