Many Americans today are suffering from the financial recession. After years of unreliable job markets, economic instability and dwindling savings accounts, some families are turning to unconventional options to make ends meet. Introducing payday loans. At first glance, they can seem like a good option. You apply and are approved within minutes with the money transferred to your account within 24 hours. But the hidden costs of these types of loans are devastating to the average consumer.
Here are the top 5 reasons to avoid payday loans:
1. Sky high interest rates. Payday loans often have triple digit interest rates – 911% for a one week loan or 212% for a one month loan. In addition, payday lenders usually require access to your bank account to deposit the money so they can decide when to wipe out your account to satisfy the loan.
2. Hidden fees. For every $100 borrowed, payday lenders charge a $17.50 fee on top of the original amount and interest rates. Payday loans are the most expensive method of borrowing money.
3. Some states ban payday lenders. Payday loans are now illegal or highly regulated in 18 states. Legislatures are trying to protect consumers by limiting interest rates and fees. Payday lenders get around these laws by hiding on the Internet and offering loans to the most vulnerable consumers.
4. Sleazy scary collection tactics. Some payday lenders use aggressive collection tactics including threatening arrest, prosecution and garnishment of wages. Here at our office, we hear from at least a dozen people a week that are caught in this scary situation.
5. Long term consequences. In the end, payday loans can haunt you for years. Not only do you pay the short term cost in hidden fees and ridiculous interest rates, but payday lenders are known for selling your information to fake payday scam companies. These companies then harass and bully consumers into paying on debts that they don’t even owe. They will call your employer, your neighbors and your relatives. One payday loan can result in a decade of harassment as your account keeps getting sold.
So while payday loans seem easy to obtain, remember the old adage of ‘If it seems too good to be true, it usually is.’ Payday loans cost you big in the long run, both in the pocketbook and your peace of mind.
You should know that under the Fair Debt Collection Practices Act, debt collectors are prohibited from using abusive, unfair or deceptive practices, including threatening violence, using profanity, calling incessantly and more. If a debt collector is found to be in violation, the law (“FDCPA”) allows you to sue the collector, stop the calls and get paid damages (up to $1,000) plus all of your attorney costs are covered.
If you have been harassed or abused by a debt collector, call us. We represent you for free. If you have been victimized by a debt collector or have items on your credit report that are incorrect, call or email Attorney Gary Nitzkin at [email protected] for a free consultation at (888) 293-2882.