Payday Loans

What Are Some Of The Most Common Risk Factors Associated With Online Payday Loans?

Considering the very fact that even the Federal Trade Commission (FTC) has warned consumers against online payday loans, it should not be an exaggeration to say that there are plenty of risk factors associated with these lending programs. It is not without reasons why the FTC often terms these loans offered by payday companies as predatory lending. There are thousands of live examples available out there for you; people are facing lawsuits, wage garnishment, and even bankruptcy just because they are badly trapped in these ‘seemingly’ attractive but ‘in-reality’ very risky Internet based cash advance loans.

Unfair Lending And Collection Practices

Whether you borrow online payday loans from an Internet based company or a cash advance from a local payday store, some common negative aspects include extremely high rate of interest, hefty amount of penalty charges, rollovers on nonpayment, additional interest at the same high rate for the extended repayment period, and many other such things. It has also been found that these lenders are not fair even in their collection practices. They keep sending the automatic withdrawal request again and again, which results in the NSF (Non-sufficient fee) fee charged for multiple times. What is more, every time the request is bounced, even the bank charges you hefty amount of collection fee. So, overall, the picture can be horrific if you fail to repay the loan on the set due date. The due date is usually just a couple of weeks away. In fact, even if you pay back on time, it can turn out to be very costly for you. In most cases, you must expect to pay anywhere around $150 for every $100 of loan you borrow for two weeks.

Illegal Lenders Are Hard To Catch

Lenders that offer online payday loans often claim that since they are doing their business on Internet and that since their company is not located in the state where the borrower resides, the state laws do not apply to them; this is not true. It is very important for you to keep in mind even Internet based cash advance lenders are legally obligated to follow the payday loan laws applicable in your state. For example, the laws in your state have restricted the maximum rate of interest to $30 per $100 (issued for a 14-day period) and if your Internet lender is charging you interest at a higher rate, it is an illegal act, which you can file complaint against. The problem here is that Internet based lenders are very hard to catch. It means even if you file a complaint against them, there is very little hope that law authorities will be able to take actions against them. The good news is that there have been some cases recently where Internet based lenders have been caught under law and have been punished for their illegal lending practices. Still, as of now, the legal protection against this type of predatory lending program is not sufficient enough in many states.

Overall, if you are considering borrowing online payday loans, you must first make sure that you are signing up with a genuine and reputable company. Besides that, it is also important to figure it out in advance whether you can really afford to pay back the loan on its set due date or not.

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