Payday Loans

What FTC Says About Same Day Pay day Loans?

Same day pay day loans, as the term suggests, are special lending programs that allow you to borrow money the same day. It means your application for these loans are approved within a mater of just a few hours. These are however small amount of loans, usually ranging from $200 to $1000, which is issued for a short period of time, usually just a couple of weeks. It is not surprising why these loans have become so popular. People with limited monthly income often find themselves in a very difficult situation when they come across an unexpected financial emergency. When they face this sort of cash crunch while the pay day is still a couple of weeks away, they start looking out for easy solutions to borrow instant, and this is where these short term payday cash advances look like a very attractive option. But, it is very important for you to keep in mind that even the Federal Trade Commission has warned US consumers against these lending programs. Read below to know why.

FTC Terms Payday Loans As Predatory

Te FTC has termed same day pay day loans as predatory lending programs because they are often designed in a way that traps consumers into a vicious cycle of debts. The lenders charge an unusually very high interest rate, which can be as high as 600% per annum or even more. Besides that, additional finance charges are also applicable, which can again be a hefty sum of money. In short, you must expect to pay around $160 (or even more) for every $100 of loan that you borrow for as short a repayment period as fourteen days. Things become horrible when you fail to repay the loan on its set due date due to any reason. The nonpayment of the loan results in rollover, which means the repayment period is extended up to the next pay day. This extension looks like a convenience, but it turns out to be very costly, as you are charged interest and penalty charges for the extended period of time. Eventually, your overall outstanding balance becomes higher than what you can afford to repay.

Therefore, if you are considering borrowing same day pay day loans, you are strongly recommended to do a thorough review of the program first. Look at both its pros and cons and then make an informed decision. Make sure that your decision is based on information and facts, not just on temptations.

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