Review The Fees Charged On Your Payday Loans Before You Sign Up With A Payday Debt Consolidation Company?
If you are considering signing up with a payday debt consolidation company to help you pay off your payday debts, you are advised to first do a thorough review of the various types of fees lenders are charging on your cash advance accounts. Now that certain payday loan laws have been introduced in almost every state of the United States of America, it is very important for you to know which types of fees are legal and which ones are not permitted under the laws. If you find that your lenders are charging you illegally, you can file complaints and even lawsuits against them.
Many times, lenders do not disclose all the terms and provisions regarding the loan clearly in the loan contract. Those hidden terms appear only at a later stage and you get shocked to see that your account has been charged with a hefty amount of penalty fee that you never expected at the first place because you never read about it in the loan agreement. It is very important for you to keep in mind that the new laws have made it mandatory for all lenders to include a disclosure box, where all such * sings or ‘conditions apply’ should be made clear. Therefore, before you hire a payday debt consolidation company for help, you are advised to help yourself. If you find out that there have been certain violations of laws on part of the lenders, you do not need to consolidate your debts; instead, you first need to take legal actions against them. It can also be your opportunity to negotiate an affordable and fair repayment plan with the lenders on your own. The more you are informed about the laws and your legal rights, the better you can protect yourself against these predatory lending programs.
Following is a brief rundown on the various types of fees that payday loan companies usually charge, most of the times illegally (especially the amount of the charges, if not the fee type itself).
Before you hire a payday debt consolidation company, you must first do a thorough review to find out whether you are being charged interest as per the legal limits allowed by your state laws. Though payday lenders are allowed to charge interest on the cash advances issued to borrowers, the question is how much. 16 states have imposed a very low-rate cap, as per which you must not be charged interest at more than 30% per annum. Other states, where low rate caps are not applicable, there are still certain maximum legal limit on how much amount of interest can be charged by payday lenders. These legal limits vary significantly from one state to another. In general, every state where payday lending is legal, lenders are allowed to charge interest at an extremely high rate, but some of them still try to charge much more than the legal limit. You can find out about the maximum interest limits allowed in your state by visiting the ‘payday loan laws’ section under the ‘payday loan’ category.
Just hiring a payday debt consolidation company is not going to be much help unless you put a brake on the cycle of payday debt that keeps on moving with every passing day. It is very important for you to keep in mind that lenders keep on charging interest on your loan right from the first day when the loan was originally issued till the day you repay the same. If you have missed the due date, the interest will continue to be charged at the same exorbitant rate, which you initially agreed upon as per the loan agreement. The penalty fees are charged additionally.
One-Time Fees For First-Time Borrowers
Many lenders charge a one-time fee to all those borrowers that apply for these loans for the first time. This is a kind of membership fee, which usually ranges from $10 to $15. It is important for you to keep in mind that many states do not allow such fees. Even though the fee amount is a very small one, you can still file a complaint against your lenders if you find out that they charged this fee illegally. A payday debt consolidation company will probably not look into all these minor details, as most of them care more about their own business and they are more interested in consolidating your loans rather than finding out what was fair and what was not fair.
When a payday loan is issued, the borrower is also charged various types of service fees, which are permitted by laws in most states, but again, there is a certain maximum legal limit. If the service fees charged by your lenders exceed this legal limit, this can be your opportunity to take actions against your lenders or at least to negotiate a favorable deal with them. The various types of fees may include verification, processing, origination, handling and other such charges.
Loan Repayment Fee
Before you sign up with a payday debt consolidation company, you also need to find out if your lenders charge a certain amount of loan repayment fee if you make the repayment in cash. Such practices are again very common, but not legal. However, in some states, if you are not making only a part payment in cash, the laws allow lenders to charge a part payment fee.
Rollover, Renewal Or Extension Fees
Every time you fail to repay the debt in full on a set due date, you get an extension for another month. This usually happens when lenders renew your loan account or just roll it over for another month. It is very important for you to keep in mind that many states have completely prohibited such practices while other states permit a certain maximum number of rollovers or renewals or extensions. If your payday loan accounts have been rolled over or renewed for more times than legally allowed, you can file complaint against your lender with the FTC or with your state authority.
Hiring a payday debt consolidation company does not make any sense while you very well know that lenders are using illegal practices and are charging you more than the legal limits permitted in your state. In such cases, it is better to hire an attorney for legal assistance than a company to consolidate your payday debts.