More than one million people 'take out payday loans' and i'm one of them,are you?

Making money last until the next pay day is an old problem, but now there are plenty of new lenders offering the solution of a payday loan.

source

Here's my story...

My daughter needed dental work and i did not have insurance at the time so i went to a payday load place and took out a 500$ loan..

(which i couldn't afford in the first place)

the interest was 75$ every 2 weeks at a total of 150$ per month...

every payday,which was every 2 weeks,...

i would pay the 75$ and still owe the principle of 500$..

after 9 months of doing this i got fed up and told them..

I have already paid you back the 500$ i originally borrowed and i cannot afford to keep doing this every month..

That is 1,350$ i gave them so far..right?

so i just stopped paying them....

you know what?

I have never heard from them again....

But it seems to be a real problem everywhere we go these days..

When i lived in Las Vegas...

the interest rate was 400%..yes..you read that right..400%!!!

The number of people taking one out has quadrupled since 1996 according to the watchdog Consumer Focus.

That is despite some companies charge interest rates of more than 2,500% a year.

The organization is now calling on the industry to bring in more safeguards to protect vulnerable borrowers.

''Payday loans are a valid form of credit and it's much better for people to take one out rather than go to a loan shark," said Sarah Brooks, head of financial services at Consumer Focus.

"But we do think there needs to be a limit on the number of loans people take out and how many loans they are able to roll over."
'Mounting up'

I think there should also be a limit on these so called Lenders who know that they are rooking you out of your hard earned money..

a loan is one thing , but raping you for every dollar you have in interest is just plain wrong...

anyone else ever go through this??


However, the pay day loan industry says when managed properly, many people find this type of lending easy to understand and less risky.
Payday loan website advert Payday loans are legal but can be very expensive

''There is a reluctance among many consumers to take on long term loans from traditional lenders, because they feel their financial situation could change," said John Lamidy from the Consumer Finance Association.

"But they find that the short term credit offered by the pay day loans industry does meet their needs.

yea it does at the moment..but long term..you are screwed...

But for many other people a payday loan is still the only legal option for short term lending, when money is tight and there is nowhere else to turn

[edit on 13-8-2010 by baddmove]

Ok, I have used these services in the past as well. The interest rates on a 2 week loan is absurd. However, the hoops are far fewer to jump through and it just normally makes the next payday a little tighter.

As to the absurd interest rates, think of it this way.

These companies are basically a legitimate form of a Loan Shark. While they do have certain restrictions they have to go by, they are pretty much just that. They also only make their money on interest.
If they could pay their employees from less interest and still be able to turn a profit, then they would probably not be so high. However, if you want to pay an idividual to watch over your money for you while working in a cash based environment that is subject to theft and personal injury, you have to pay that person a very competant wage. Or else you run the risk of them getting the job, robbing you blind and never being seen again.

They might be an evil, but in a lot of cases, and for a lot of people, they have always been a necessary evil.

reply to post by baddmove



Short answer no but almost until I realised the real cost.

A few years ago I applied to do a 1 day a week (12hrs) course over 2 years for work so I could get a pay rise, a significant one.

I was called to say I had been accepted and would I pay the first 6mnth fee of $600, told the course started in 9 days and before i was allowed to start I had to pay the fee.

I was told there were others waiting on a list and i had to confirm and pay by the weeks end.

I needed money FAST and I still had to eat, pay bills ,rent etc.
The bank offered to lend me money but would only lend me amounts above $5000.Since I had no reason to borrow $4400 more than I needed i declined.

I called a payday lender who approved a loan and we agreed she would come to my work so I could sign papers.She was explaining the terms and repayments in a most confusing manner.I cut her off and asked what was the total amount I would pay back the reluctantly disclosed answer? $1350.
I declined the loan.

Fortunately a co worker told our boss and she deposited $600 into my account and redued my wges by $100 a fortnight for 6 fortnights.
I was lucky

We even have maximum interest of 26.9% per month on payday loans and they are still too high.

I find it unethical as a bank loan would usually have a max of 20% but typically 15-17%. A lot of people who are too disadvantaged to receive a bank loan are forced to pay more to payday lenders.

Yet again those with the least pay the most.

Plain and simple, it's predatory and should be criminal.

Pay off the politicians though and all is good:

www.huffingtonpost.com...-for-influence-chart

No I have never used payday lending, but I have used something kind of like it. I have used what is called a "Hard Money Lender" for some of my real estate investments. They charge a pretty high interest rate for loaning me the money to complete my deals, it's quick and short term. I no longer use hard money since I have private lenders. I have loaned people some money and I usually charge 10%-12% interest, as long as they have some collateral. The majority of people that need this type of loan (Payday Lending) can not go to the bank and get the funds they need because of bad credit or other circumstances and these payday lenders know this. So, these people are viewed as a HIGH RISK to loan money to so they charge outrageous interest rates. I DO NOT AGREE with taking advantage of someone who is obviously in a financial crisis, and this type of lending is doing just that.

The biggest problem I have with them is how many are concentrated around our military installations and housing. Took a bunch out about 9 years ago and stiffed everyone. Guess I fell through the cracks because nothing ever came of any of them and after 4 years I was able to get a bank account and two years ago my credit score was spotless thanks to statutes of limitations. Don't recommend doing that but I was young. It is not their fault however people choose to frequent their business. Some people really need these operations in time of need or desperation. They provide a service people choose to patronize for instant cash solutions to financial problems they need to deal with in emergency situations, or whatever the case may be.

I don`t know which is worse, these payday loan companies, or the people who use them. I mean think about it, when you ask for a loan from one of these places, you have to read the contract before signing it, right? They tell you what they charge as interest, it`s not like that it`s a big secret what they charge. Could this be the problem, people NOT reading the contract first? If that is so, then they deserve what they get in the end. These companies have always been a parasite, but they do follow the law, by stating in the contracts what they charge as interest. So how do you get ride of such parasites? For one, read the contract first to see if they charge outlandish interest rates, and if they do, drop them like a hot rock.

I`ve had people tell me that they used these places before, because they had a bill pop up that needed to be paid right away. Well, who bought the stuff that created the bill in the first place? Why are we buying more than we can afford? THIS is why these companies exist. They take advantage of people who can`t manage their own money. And it`s these people who HELP/ALLOW these companies to exist.

I'm sorry...but I don't think these are predatory, criminal, or anything else.


Look...YOU took advantage of their service when you needed it...and now you are complaining about the terms YOU agreed to.

Let's take some responsibility people...whether it is a payday loan, car, or house....DON'T BUY IT UNLESS YOU CAN AFFORD IT.


And to the OP...bottom line is that you are still on their books...and every missed payment is being recorded...interest is being added. At some point they WILL call you on that dept. And at that point you will be sent to collections....your credit will be crap...and it will all be YOUR fault.

I really hope we don't see another thread when this happens complaining about how this payday loan company ruined your credit.

Here in Arizona they made it illegal. They closed shop last month.

These places are actually run by major banks.

My husband has had to use them, once when our air conditioner died in July and it was 115 out, and once for an emergency vet bill.

We are not stupid. We have bad credit because I am sick with major health debt. Hard to clear that debt when you are not getting better and have helicopter rides to the hospital to pay for. (To the person who said stupid people take them)

Anyway, I am glad they are gone. With the law, they have now changed how it works here. It works like a signature loan, the interest is less, and you HAVE to pay in back in two weeks and can not just pay the interest to keep it going.

So states, YOU NEED TO PASS THESE LAWS for change.

Ama

I used to work for a pay day loan company a few years back. Bottom line is they are there to provide a service to the public. A loan that may not be granted for whatever reason, anywhere else.

The client is informed ahead of time what the fees and interest are and they are posted where they are visible to anyone walking in the door.

It is true that SOME pay day loan companies are sheisters, especially those you may borrow from on line...bad move...
For the most part they are required to be upfront about their transactions.

At the end of the day, they are there to help when they can, but as the client, you take advantage of their services you will owe it back just like any bill you owe. Don't pay...you will go to collections.

Know what you can afford and follow accordingly.

~Holly

[edit on 14-8-2010 by Holly N.R.A.]

Originally posted by OutKast Searcher
I'm sorry...but I don't think these are predatory, criminal, or anything else.


Look...YOU took advantage of their service when you needed it...and now you are complaining about the terms YOU agreed to.

Let's take some responsibility people...whether it is a payday loan, car, or house....DON'T BUY IT UNLESS YOU CAN AFFORD IT.


And to the OP...bottom line is that you are still on their books...and every missed payment is being recorded...interest is being added. At some point they WILL call you on that dept. And at that point you will be sent to collections....your credit will be crap...and it will all be YOUR fault.

I really hope we don't see another thread when this happens complaining about how this payday loan company ruined your credit.

Actually, you are wrong...

They are not charging me still.. they were sending me letters for a while but have stopped...

My credit is so badd that i don't think they will even attempt to try and add something like that to my credit score..lol

too many bills over the last few years to pay back, all medical..

credit scores are stupid anyway, it seems like that is the new America now..

credit score..credit score.. it's all i hear about anymore..

Personally, no I have never taken a payday loan, but a close friend took out a title loan on her car once. It was the biggest nightmare ever!!!!!!!!!!

She took out $1000 against her car, for an emergency. After about a year, she had paid them about 15000 and was at risk of defaulting and loosing her car, which is when I heard everything that was going on. It was genuine loan sharking, and I have no idea how this places can be legal, but she was young and thought it was a solution to her problem.

I went with her to find out exactly how much she needed to pay to be rid of this "loan" and I lent her the money to pay it off and be done with the whole nightmare.

I know emergencies happen, but avoid these places at all costs.

These businesses make high risk loans to people with bad credit. They have to charge high interest. I don't see why it needs to be regulated. If you don't want to do business with them then don't.

How about reforming the tax codes, which are involuntary and took 48%+ of my salary last year.

[edit on 14-8-2010 by dietsamcola]

I believe your credit score is very important...take very good care of it!

reply to post by OutKast Searcher





And on another note - Banks are doing the same thing, and in a more convenient way.

If you have Direct Deposit Wells Fargo will allow you to take an advance on your next paycheck up to $500.

$2.00 for every $20 you take.

This seems far easier to get caught up in than payday loans - you don't have to go anywhere to get the cash - just log in.

reply to post by dietsamcola

How about reforming the tax codes, which are involuntary and took 48%+ of my salary last year.

It's coming, stay tuned...

Congress has no choice but to begin facing some of it by end of year and into 2011 due to the Bush tax cut expirations. In addition, it's a prime time for many to begin discussing alternative systems. VAT, etc.

reply to post by OutKast Searcher


I am in a comfortable situation financially so I am not personally affected by the circumstances others find themselves in.

I am able to see past my own situation.

Unemployment, sickness, injury, disability.
These are all situations that can leave people in financial duress.
Often these loans are taken for bills, medical and transport needs.It does not mean the recipients they are spending 'above their means' on useless material possessions.

Just because the terms and conditions are outlined does not make them just or ethical.
The are designed specifically to profit from desperation.Nothing less, only the desperate would accept such terms and conditions.

I assume by your life view you have never been in a situation where you have been subjected to poverty.

Some people see the financial desperation and see an opportunity to exploit these people by charging astronomical interest.

But others saw this situation and do you know WHAT THEY DID?
They set up a charity called NILS, No Interest Loans.
Funded partially by government, supported by corporations and businesses.
They provide loans for people in disadvantaged situations with no interest