Payday Loans Articles
Payday Loan Facts
A payday loan is a short-term cash loan that is awarded based solely on the
borrower's personal check, which is held for a future deposit
or electronic access to the borrower's bank account. To
get a payday loan, the borrower will write a check for the
amount of the loan plus whatever fee is charged. The borrower
then receives cash in return for that personal check. Sometimes,
borrowers sign over the right for the lender to electronically
access their bank accounts in order to receive and repay
the money for payday loans.
The lender will hold the check until the customer's next
payday. At that date, the loan and finance charge must be
paid in full. Borrowers can either allow the lender to deposit
the check, redeem it for a cash payment, or pay the finance
charge and roll the loan balance over to another pay period.
Payday Loan Terms
The size of a payday loan typically ranges from $100 to
$1,000, depending on what is legal in the state. These loans
are typically given for a two-week term. The average annual
interest rate (APR) on these loans is 470%. The charges
on these loans are usually between $15 and $30 for a loan
of $100. If the loan is a two-week loan, these finance charges
equal interest rates from 390 to 680%. Loans with shorter
terms have even larger APRs.
Cost Compared with Other Cash Loans
Other cash loans, in general, are relatively much less expensive
than payday loans. Consider that a $300 cash advance from
an average credit card has a finance charge of $13.99 for
one month, which amounts to an annual interest rate of just
under 57%. On the other hand, a payday loan for the same
amount will cost $17.50 for each $100, or $105 if renewed
one time. This will add up to 426% annual interest.
Requirements to Get a Payday Loan
There are few questions to answer and no credit check is
involved when seeking a payday loan. All that is necessary
for approval is an up-to-date bank account, a reliable source
of income, and proper identification.
Payday Loan Industry
Payday loan stores, pawnshops, and check cashers are the
types of companies that make payday loans. Some companies
that offer rent-to-own products also offer payday loans.
The Internet is another place where you can get a payday
loan, and some are marketed through toll-free phone numbers.
CLR reported around 25,000 payday loan outlets in
the United States in 2006. This resulted in at least $28
billion in annual loan volume, with loan fees paid by consumers
totaling almost $5 billion.
Legal Status for Payday Lending
Thirty-six states and the District of Columbia currently
have laws that regulate or authorize payday lending. Michigan
is the most recent state to have done so, as it passed this
type of legislation on June 1, 2006. Licensed lenders are
permitted to make payday loans in two other states. Two
territories and twelve states do not currently have payday
loan authorizing laws. Supervised lenders in Maine can choose
to use a fee structure that allows some payday lending,
but Maine does not have industry legislation at this time.
To find out more about the legal status of the industry,
click on Legal Status.
Tactics to Evade State Small Loan and Usury Laws
Some lenders cloak loans through sham tactics. These can
include tactics like offering Internet access with rebate
schemes. Texas, for instance, has many lenders that call
themselves "Credit Service Organizations," which are unregulated,
so they can evade the limits set by the Texas Finance Commission
and the state's small loan laws. The Federal Deposit Insurance
Corporation is working to stop around a dozen banks from
"renting" charters to help payday lenders work in states
where it is not legal to do so.
Debt Traps
Because payday loans have a high borrowing cost, a short
repayment term, and strict consequences when borrowers do
not pay the loan, these loans can trap consumers into a
repeat borrowing cycle. The average amount of loans that
consumers make with the same lender is between eight and
thirteen. One state has nearly 60% of all its loans made
as same day renewals, or brand new loans that are taken
out as soon as the consumer has paid off the previous loan.
Risk and Cost of Checks for Loans
The checks written to secure a payday loan are checks that
are not covered by any funds in the customers' bank accounts.
This means that these checks bounce when the customer does
not pay, resulting in fees from the borrower's bank and
the lender. Also, returned checks can negatively affect
the consumer's credit history. Consumers can also lose their
personal bank accounts if there are too many bounced checks
recorded on the account, especially if these bounced checks
were used to get payday loans.
Coercive Collection Tactics from Check Holding
Some lenders use coercive collection tactics because they
have consumers' personal checks to secure loans. Criminal
penalties are sometimes threatened for those who cannot
make good on checks. Sometimes, military personnel are threatened
with a court martial if they do not pay their payday loan
checks. Some states allow lenders to sue for multiple damages
for bad checks with civil bad check laws.
Internet Payday Lending
Using the Internet for payday loans adds the risk of security
breaches and fraud. Applications are filled in online or
faxed to the lender when consumers apply for Internet payday
loans. The money is directly deposited into the borrower's
bank account through an electronic transfer. They are also
electronically withdrawn on the following payday. Many Internet
payday loans renew automatically each payday, and the lender
automatically withdraws the finance charge from the borrower's
account with an electronic transfer.
As a payday cash advance company, we provide quick access to the money that working Americans need to meet their financial responsibilities. Those who are seeking a responsible way to manage their cash flow will find payday advances to be a good choice, particularly when compared to the cost of missing a payment or writing a check that bounces. Our products have helped millions of people, like you, avoid late fees and interest on their credit cards, fees for non-sufficient funds, and other penalties for missing payments.
Most people who use payday advances are responsible in the way they use them by paying them off on time. Critics of the payday advance industry are surprised when they learn that our customers have active bank accounts and steady paychecks. Our customers are also extremely happy with the products they receive, with few filing any complaints.
The payday advance industry is welcome to regulations that protect our customers, while preserving the opportunity to access short-term loans for the thousands of customers who need them each month. Our trade association, the Community Financial Services Association of America (CFSA), supports legislation that protects customers and encourages companies like ours to use responsible business practices. Thirty-seven states and the District of Columbia currently have regulation of the cash advance industry.
We believe that consumers need to use careful thought when they take out a loan or use their credit cards. However, there are thousands of hardworking Americans who are fundamental to our society, such as teachers, bus drivers, and police officers, who find that they are sometimes struggling to pay their monthly obligations, and they have little money to fall back on. As demand grows for our products, we realize that our customers are facing increasing financial pressures every day. A responsible payday advance company will offer these hardworking people the tools they need to manage their bills and keep their credit scores clean, while having the ability to cover the gaps with privacy and self-respect.
The way for a consumer to secure a payday advance is to visit a center with an ID, proof of income, and a bank statement. The application form is completed, and the customer will sign the payday advance agreement. Then, the customer will write a personal check for the advance plus the advance fee. The fee is typically $15 for a $100 loan. The center will then issue a check for the advance amount. The customer will return to the center on the due date, which is usually payday, and pay the loan back. The check is then returned to the customer.
Payday Loan Tip #1: Avoid Quick Cash Loans
Many families in America struggle with their finances each month. They work hard just to pay their bills. Often, these families run out of money before their next payday. When this happens, borrowing from a payday loan store is not always the best option. These high cost loans must be repaid when the next paycheck comes, and this does not solve a financial crisis. In many situations, these loans make the problem worse. Dealing with financial problems without adding any more debt to the situation takes work and creativity, but it will save you money, stress, and anxiety.
One way to avoid needing quick cash payday loans is to build an emergency fund of $500. Even if your household budget is tight, an emergency fund is necessary to deal with the ups and downs of life, including unexpected bills and emergencies. Start small, saving just $10 per paycheck. If you have an electronic deposit set up with your employer, ask if you can have a portion of that money deposited into your savings account. You can also visit www.AmericaSaves.org to find ways to save money.
Creating a household budget is a good tool to help you find ways to save and track how you are spending your income. Write down all your income and expenses. Create a workable spending and savings plan with each member of your family. Be sure to set aside money from each paycheck to deal with those bills that come due at regular intervals, such as once or twice a year. Also, plan ahead for those special expenses, such as holidays and vacations.
REASONS WHY YOU SHOULD BUY A Kids plastic table FOR YOUR CHILDREN. Pharmacie en ligne acheter v i a g r a pas cher.
