If you think the economic recession is an advantage to payday cash advance lenders, think again. The recession had a bad effect on lenders because of the increase in the unemployment rate which has affected the ability of consumers to earn money. Their customers don’t have any source of income and are unable to pay their loans and other bills. Eventually, some consumers will declare bankruptcy. When this happens, there is nothing a lender can do except to get what they can extract from the borrower and in many cases there is almost nothing.
Because of this, many lenders have increased their screening process for approving applications and limited the number of loan approvals. In fact, even a good credit rating or sustainable income won’t assure a payday cash advance applicant of getting approved for a loan.
So many consumers turn to lenders who easily approve loans. Many of these consumers have fallen for lenders who are into predatory lending practices. These loans come with easy qualifications but the interest rate is very expensive and may be debilitating to a consumer. In fact, some consumers end up losing their property or declaring bankruptcy. The result is that consumers who work with lenders that are into predatory lending practices find themselves deep in debt for many years because of the steep interest rates.
Many have fallen into predatory lending practices because of convenient and quick services with less documentation required. Some don’t even ask you to fax your documents. The personal information you provide online is sufficient for the processing and approval of your loan. As long as you can provide them with proof of your source of income, your loan application will be easily processed.
However, the consequences of working with lenders who are into predatory lending practices are detrimental. The interest rate may be more than the 10% range, excluding late penalty charges. If you are unable to pay on time, the interest rate easily piles up leaving you to pay more than you have actually borrowed.
Also, you can’t easily walk away from these lenders. They will hunt you down until you pay them. They hire collection agencies who repeatedly ask you for your payment by make annoying calls at home or at work. They will also send you letters by mail to collect payments. They may falsely threaten you with check fraud and threaten to put you in jail in order to make you pay. There are some lenders who threaten you by saying they will call up your employer which creates a bad impression on your employment status and may ruin your career.
Prevention is the key to avoid getting into trouble when working with lenders who are into predatory lending practices. Consumers must avoid them even if they are the last resort for a financial resource. There are still other options that will not put consumers into serious financial trouble. For example, there are non-government and government organizations that have been given the responsibility to assist those in deep need of cash assistance. Most of these organizations offer loan modification and refinancing with low interest rates and affordable costs.