Category Archives: Payday Loans

The Effect of Predatory Lending Practices on Payday Cash Advance Consumers

Posted on by
Reply

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.

Facts about Collection Laws concerning Payday Cash Advance Loans

Posted on by
Reply

Payday cash advance loans are popular with US payday loan consumers because these loans provide very easy and convenient access to instant cash. Employed people who have limited income and often find themselves in deep financial trouble turn to these payday cash advance loans.

Payday cash advance loans have become the best option for people with bad credit or poor credit histories because they can easily qualify for them. There are no credit checks performed. The approval and the processing of the loan is quick which makes many consumers tempted to borrow and re-loan.

However, payday cash advance loans are short-term loans only. They must be repaid with the next paycheck you receive. They also come with high interest rates due to the high risk lenders take for these unsecured loans. If a consumer fails to pay the loan, lenders charge additional fees sometimes making the loan difficult to repay.

Usually, lenders become very aggressive in terms of payment collection. Some may even threaten or harass defaulting consumers. They threaten consumers with jail time if they are unable to repay their loan. Although consumers are obliged to face their responsibilities, lenders have no right to force or threaten them. In response to alarming collecting activities of some lenders, the government has imposed Collection Laws that will serve as a guidelines of what lenders must legally do to collect.

Consumers should be advised that non-payment of payday cash advance loans is not a criminal offense, except when fraud is committed. A lender can never file a criminal lawsuit against you, only a civil lawsuit. If you are negligence repaying your loan, your lender can demand payment collection by filing a civil lawsuit. Punishment for such civil lawsuits does not include jail imprisonment. The court can force you to file bankruptcy, which stays on your credit report for up to 7 years, garnish wages and certain assets, or require you to undergo a debt consolidation plan.

If lenders file a lawsuit that is not valid, you can, in turn, file a lawsuit against them if they harass or threaten you. Under the Collection Law or the Fair Debt Collection Practices Act, these are the collection activities that are considered as harassment to a consumer:

·    Annoying Phone Calls

These are not just phone calls for the payment collection, but unreasonable phone calls that may happen at dawn or late at night. The law states that phone calls for payment collection must be only between 9am and 8pm. Also, lenders can only make two to three calls per day. You can report them to the authorities if they are using abusive language over the phone. Record the call so you will have evidence.

In order to stop them from calling you, you can send them a letter and request that they not call you.

·    Contacting You At the Office

When lenders start calling you on your work phone for payment collection, this is harassment. They are not supposed to be doing so because they are breaching your privacy and confidentiality. You may write a letter of request to them to stop calling you at work. If they fail to honor such written requests, then you can report them to authorities.

                                              ·    Making False Threats

Desperate to get their money back, lenders will frighten their consumers using false threats, such as filing a criminal case or putting them in jail. As mentioned earlier, non-payment of payday cash advance loans is not a criminal offense and cannot put you in jail, except when a criminal law is violated.

·    Using the Same Bounced Check For Collections

The bounced check you already issued to your lender should not be used for payment collection. If the lender does this, it is considered financial harassment.

If lenders use extreme and harassing collection activities, you can file a complaint against them for violating the collection laws as imposed by the Fair Debt Collection Practices Act. As a consumer, be familiar with these laws so that you will not be the victim of abusive collection activities of some lenders.

New Bill on Payday Cash Advances

Posted on by
Reply

Most of the payment defaults that borrowers of payday cash advances incur are due to the short repayment periods. High fees are also big contributors to defaults because borrowers couldn’t afford to pay for them in a very short period of time. New bills have been passed in the US Senate to address this problem. Borrowers will have more time to repay their payday cash advances and the fees associated with them are limited.

The two new bills will impose new regulations on the payday loan industry. According to Sen. Joseph Keaveny, “The bills are attempts to address the industry’s worst abuses by requiring a minimum repayment period of 90 days and a state database to monitor lenders. This is to allow payday cash advances to serve as an emergency lender. Let’s hold them to what they call themselves.”  Keaveny and Sen. John Lamping are the co-sponsors of the bills.

Aside from the 90-day repayment period given to payday cash advances, the bill will also prohibit borrowers from having more than one outstanding loan at a time. This means that rollovers or the renewal of payday cash advances every 2 weeks with additional fees, will be prohibited. This is to urge borrowers to make regular payments. According to Sen. John Lamping, “This might be that one year after so many years where the industry makes a serious attempt at self-regulating.” They hoped that this bill will be the crucial firsts for reforms in the payday loan industry.

The existing state laws have allowed lenders of payday cash advances to give their borrowers a repayment period of 14 to 31 days secured by a post-dated check. Most of these loans cost their borrowers about $17 to $20 per $100 borrowed. Additional fees are charged if the borrower renews the loan for an additional two weeks.

However, there are pitfalls in these bills according to some. Rep. Mary Still doubts if the co-sponsors (Lamping and Keaveny) have a bill that will put a dent in the problems she sees with the industry. It has been proven that when fees are limited and interest rates are capped at 36% APR, there has not been any sign of eradication of predatory practices among lenders. The bill may be a great initiative, but it may not be enough. “I would be interested in working with them on a compromise,” Rep. Still added.

But there are others who support the bill, such as James Bryan of the Missourians for Responsible Lending.  He said the bill is a good initiative for payday cash advances to move from being a scourge on society to helping in the right direction. Randy Scherr from the United Payday Lenders of Missouri also added, “If the bill drives the industry out of the state, then it will cut off emergency credit to people with no other means of obtaining it. So, this bill needs further study before total implementation.”

For borrowers of payday cash advances, it is important to know the inclusions and the limits of this bill to have an informed choice. For lenders, it will be helpful if you also read the terms enclosed in this bill. And for legislators, think of a win-win scenario for both the consumers and the lenders.

Payday Cash Advances Keep Borrowers Returning

Posted on by
Reply

The repayment option of rolling-over the previous loan into a new loan that lenders offer to their borrowers has resulted in the repeated borrowing of most consumers of payday cash advances. A survey reveals that 38 states in the US permit interest to be charged at triple-digit annual average rates.

Usually, when a borrower plans to take out a payday cash advance, he usually includes in his postdated check the interest fee and the principal amount. The lender will hold the check for about two weeks or until a paycheck or Social Security payment is issued to the borrower. Once the borrower receives his paycheck, the lender deposits the check as repayment of the loan. This is the way payday cash advances should work.

However, a report from the Center for Responsible Lending reveals that 90% of borrowers of these small, short-term and high-cost payday cash advances, practiced repeated borrowing. In fact in the state of Virginia, it was found that 85% of payday cash advance borrowers returned to the same store in the same year for about a dozen times.

According to Jay Speer, the executive director of the Virginia Poverty Law Center, this is a strategy of payday lenders. He said, “They set it up so you have to pay the whole thing off in two weeks and they know you can’t. It’s bad enough that the interest rates are 380% APR, but the worst part is that they trap you.”

Originally, payday cash advances were designed to meet an emergency need only, that’s why they have shorter terms, usually two weeks. However, many borrowers have used repeated borrowing because they are unable to pay within the allotted time. From this point of view, borrowers are the ones to be blamed for getting trapped into the cycle of debt.

According to Jamie Fulmer, investor relations director for Advance America, Cash Advance Centers Inc., “If you look at our target customers, they are middle-class working Americans who for whatever reason get caught between paychecks without alternatives.”

The payday cash advance industry has profited for the past years. Last year alone, the industry generated about $6 billion in fee revenues and $40 billion in loan volume at 23,000 stores. An estimated 24% increase was seen on their net profit from the previous year. About 70% of this profit is estimated to be coming from fees and income of repeated borrowing.

The growth of repeated borrowing among consumers of payday cash advances is quite alarming. A report shows that consumers receiving between 2 to12 loans last year rose to 23%, and those receiving more than a dozen loans rose to 19%. Why such an increase in repeated borrowing? This may be the question that only borrowers of payday cash advances can answer. Consumer advocates say that lenders attract customers because, unlike banks and credit unions, payday loans have fast approval rates, ask only a few questions and you don’t need good credit scores. As a result, many people patronize these financial products and have been repeated customers.

The government and consumer protection groups have been working extensively to prevent borrowers of payday cash advances from being trapped in debt. However, these borrowers also need to be educated to make informed and wise decisions. This will be the key to save them from drowning in the well of debt.

Payday Cash Advances| Cheaper than Bank Overdraft Fees

Posted on by
Reply

It may sound unusual to say that the cost of paying for a payday cash advance is cheaper than paying for an overdraft fee in banks. The Federal Deposit Insurance Corporation (FDIC) published the results of their two-year study regarding the use of overdraft programs operated by their supervised banks. Their study revealed that a typical bank has overdraft fees that are more expensive than paying interest fees and other additional fees for a payday cash advance.

The FDIC is managed by a five-person Board of Directors, who are directly appointed by the US President and confirmed by the Senate. This study by the FDIC on Bank Overdraft Programs was initiated in 2006. This is in response to the rapid growth of automated overdraft programs where the bank honors a customers overdraft obligations by using standardized procedures through non-sufficient fund (NSF) transactions. All data and information gathered was based on a survey from 1,171 FDIC supervised banks and separate data requested from customers from 39 other banking institutions.

In the study conducted by the FDIC, they have found that a typical NSF check can result in overdraft fees and interest as high as 3,500% APR. These are the results of the study:

  • $20 overdraft fee = APR of 3,520%
  • $60 ATM overdraft = APR of 1,173%
  • $66 check overdraft = APR of 1,067%

In addition to these numbers, the study revealed that most of the customers who incurred these charges belong to the low-income with a median annual income of less than $30,000. Furthermore, the study also found that, unlike payday cash advance companies, at least 75.1% of banks automatically enrolled customers in overdraft programs that carry APRs and other fees more expensive than a typical payday cash advance.

Other essential findings that the FDIC revealed in their study include the following:

  • 90% of the banks surveyed allow NSF transactions without informing the consumers and less than 8% of  the banks inform consumers that funds are insufficient before extra charges are imposed.
  • There are about 12.5% of banks who have received consumer complaints about automated overdraft programs.
  • 9% of consumer accounts have (10) NSF transactions during a 12-month period and 4.9% had (20) or more NSF transactions. The accounts who incurred 20 or more NSF transactions were charged $1,610 per year.

This study by the FDIC shows that payday cash advances are a good and reasonable financial resource option. It shows that they have significantly less expensive rates compared to traditional bank overdraft fees. This retaliates the claims of some critics that these types of financial resource are expensive and predatory. Even so for several years, consumer advocacy groups like the Center for Responsible Lending (CRL), have relentlessly campaigned to ban payday lending in the country which leaves consumers with no other option than to pay expensive bank overdraft fees.

With Payday Cash Advance Loans You Will Not Be Brought Down By a Financial Crisis

Posted on by
Reply

Today, millions of individuals from all over the world are affected by the global financial crisis. Even America is not spared from the crisis which has left millions struggling with their personal finances.

According to a recent Federal Reserve report, more than half of all American families are struggling with more than $75,000 of unpaid obligations mostly from mortgages, credit cards and loans, totaling $11.5 trillion nationwide in consumer debt.  According to a recent survey conducted by PNC Bank, many young Americans between 18 to 35 years old are already hooked on card debt with an average balance of $40,000 per individual.

So how do you cope with debts and expenses?  For those employed, getting a payday cash advance loan is a convenient option.  By taking advantage of payday cash advance loans, a borrower is able to acquire needed cash as soon as possible.

Borrower just need to apply for a loan online, fill-out an online application form from the loan provider of his choice and in less than an hour, cash is transferred to his bank account.  Purchases or paying bills can now be done quickly.

No qualifying documents are required to be submitted to qualify for a loan. Even individuals with low credit scores are welcome to apply for a cash advance loan. Meaning, even if the borrower has a very low credit score, he is still entitled to apply for this type of loan program.

With payday cash advance loans, spending is controlled.  A borrower is not tempted by a situation where he can run up a huge balance. The borrower knows how much would will be billed for his loan payment on his next payday.  Whatever is written in the contract is precisely the amount that will be paid.

Payday cash advance loans are designed to be paid within one or two payday periods.  Paying your payday cash advance loan as soon as possible reduces the overall costs and improves your credit score.

As a responsible creditor, you must deal with commitments in a responsible way. Payday cash advance loans are not to be used in a frivolous way.  Have a plan on how your money will be spent and stick to that plan. Undoubtedly there will be more hard times ahead. What matters is to use all possible means to cope and get back on track. There may be more bumps ahead before you can achieve your financial goals but by taking the right steps to deal with your finances, you will get back on an even keel.

Resilience Coupled With Payday Cash Advance Equals Financial Stability

Posted on by
Reply

More and more individuals are worried about their family’s future.  Even those who are fortunate enough to be employed are not alien from the struggles of paying off financial obligations.   Many have significantly cut down on their spending including credit card usage. This is due largely because of the increased costs that come with borrowing cash from credit cards.  Loans made through banking institutions whose interest rates are sky rocketing and you have to go through form and form in order to apply for a loan are not very convenient either.

So what is the best alternative to meet your monthly obligations, even before pay day?  How will you pay your monthly mortgage when what you’re earning is no longer enough to cover all your regular monthly expenditures?  How do you keep up with utility bills whose due dates fall just before pay day?  What are your best options when faced with these kinds of problems?

One of the most popular convenient financial solutions are online payday cash advance loans. This short term financial option is usually used by borrowers for paying for crucial financial obligations like medications, house improvements, expensive car repairs,  costly medical bills or any emergency expenditure that comes up unexpectedly.  It does not really matter how the money is used.  The borrower is given the prerogative how he wishes to utilize his loan.

According to an analysis made by creditcards.com, the usual borrowers of payday cash advance loans are those employed individuals who make over $47,000 a year and have been employed by one employer for more than four years. This is contrary to the notion that payday cash advance loans are intended for those in very low income brackets.

In a recent study made by a Wallstreet analyst, is was found that the average payday loan borrower makes an average of 11 transactions in a year using deposits and withdrawals.

Payday Cash advance loans do not require collateral like houses, trust funds, bonds. Although the interest rates are much higher than regular secured loans, they are definitely lower than what most credit cards charge. This type of loan risk is usually at the medium level.

If you pay your loans late or you fail to pay for your loan, your loan provider will still charge you additional interest along with fees and put a ding on your credit rating. Payday cash advance loans are the best option to consider when you opt to pay off higher or variable interest debt for a lower fixed rate payment.

Remember, the heart of any recovery is your attitude towards every crisis. By being resilient and keeping a tight leash on spending you will have a good remedy to an ailing financial situation.

Understanding Payday Cash Advances for Making an Informed Decision

Posted on by
Reply

Payday cash advance sites are very useful online resources that provide timely and informative data on financial products that we can take advantage of especially during times of need. As more and more people are becoming interested in taking advantage of this short term quick cash lending option, the need for more information continually grows.

 
Having less information about a certain product, like payday cash advance loans, imposes limitations on a persons financial options.  By not taking advantage of an alternative financial option when one is in dire need, limits your ability to rent a car, buy plane tickets online, pay for medication or make any necessary purchases. Having no cash on hand basically shuts you out from getting the products or services you need.

 
It is important to know that there is help available. There is an untapped resource that you can take advantage of to keep informed.  Blogs, reviews, articles, and posts that are continuously updated will keep you informed about the recent developments about payday loans and added services that makes this loan option a convenient alternative. Perhaps, you might have queries or experiences you want to post or there might be an article that correlates to your interest about payday loans. Either way, such online information can be very helpful.

 
How do you make a comparison between a payday loan and another alternative financial option?   Any interested borrower should try to shop around online for the best deals before finally deciding to take out a loan. Well-researched information fuelled with understanding from loan provider goes a long way. An interested borrower may browse through sites 24 hours a day whenever it is convenient for him, from Monday to Sunday even during holidays since online payday loan sites are open to cater to your loan needs all the time.

In an important article on payday lending, Stegman (2007) found out that 5% of the total US population has taken out a payday cash advance loan at some time in their lives.  Approximately 10% are still apprehensive about taking advantage of this loan option and are somewhat unlikely to obtain a loan because of apprehensions of being victimized by predatory lenders who are operating online.

 
Regardless of whether it is a negative or positive, any information that gives an interested borrower a better perspective about which option is best to take by weighing all the ways a payday cash advance loan may benefit you and your financial status.
According to Petru Stelian Stoianovici, a researcher from the Brattle Group of Companies and Michael T. Maloney, an economics professor from Clemson University, “there is no empirical evidence that payday lending leads to bankruptcy filings”.

Payday Loan Programs Attracting Support

Posted on by
Reply

More and more people are beginning to take advantage of the payday loan program.

Over the past decades, payday loan programs have grown dramatically making it the top loan program in the cash loan financing service industry.

The non-traditional way to get a quick cash loan with safer delivery features makes it a more attractive financial tool to address borrowers immediate need for cash.

This 8-billion a year payday loan industry is serving at least 9 million families in the United States and is continually attracting more industry players.

The usefulness of the payday loan program has quickly built awareness and following among lenders and borrowers since it has proven its dependability. Financial experts expect increases in lending revenues due to the key changes recently introduced in the market by loan providers.

Innovations like the prepaid debit card system eliminates the amount of paper work involved in paying for a payday loan. Faxing  documents is also excluded since loan providers can access online databases to verify a borrower’s identity, making loan applications fast and efficient. Cash loans can be accessed 24 hours a day, 7-days a week for the convenience of the borrower. Payday Loan applicants no longer need to go through the hassles of a face-to-face transaction or personal visit to the lender’s office since applications are done online.

A flexible repayment scheme introduced by lenders makes the payday loan more attractive to its target market.

A simplified loan application form requires the borrower to fill-out an online loan application which will be the basis of how much money will be granted by the loan provider.  So, it is very important to give the correct information on the application form. Borrowers are guaranteed by loan providers that all the information supplied in the payday loan application form will be treated confidentially especially the borrowers personal and bank account information.

Loan applicants with a previous bad credit history are still welcomed to apply in the payday loan program since loan providers or loan companies do not require  the applicants credit history records before approval of the loan.

Payday loans also appeal to people who need to borrow to avoid late payment penalties on bills and bounced-check fees but do not possess any credit card or credit line.

The payday loan program will continually evolve and transform as more and more people are taking advantage of this program. It is truly a terrific alternative to a traditional loan.