#1 Pew: two week payback time unrealistic for most payday loans02-24-2013, 11:09 PM
By Mark Huffman
Every year 12 million U.S. consumers take out a short-term payday loan. Most are faced with a financial emergency and plan to repay the money quickly. Most, however, quickly discover they can't.
"I fell on hard times and decided to take out a small payday loan," Tareeka, of Jackson, Miss., wrote in a ConsumerAffairs post. "The company loaned me $600.00. I already made a payment of $486.00 so far and still owe $812 and only borrowed $600. This is paying more then double back."
Tareeka's story is far from unusual. A new report from The Pew Charitable Trusts found the average payday loan requires a repayment of more than $400 two weeks later. The average borrower, the report says, can only afford to pay $50.
The question never asked
If borrowers stopped to think, they might see the trap. If they are short of money now -- requiring them to borrow -- how are they going to be able to pay the money back, plus fees, in just two weeks?
But when people are in desperate straits, they often don't think ahead. When two weeks go by and they are unable to repay the loan, they have no choice but to borrow more money, starting the cycle all over again.
This kind of lending used to be illegal.
02-24-2013, 11:48 PM
- Join Date
- Mar 2010
Amscot is huge here.
While about almost as sleazy as car title loans, Amscot gains a touch of respectability in that they do indeed provide "banking services" to people who banks don't want to do business with. They will cash checks and issue money orders (for free) and I think they even have a rechargeable debit card that they will load with your paycheck or direct deposit.
Their true colors shine through though when you consider their hours. It's difficult to imagine why they are open 24 hrs a day. Other than bail or drugs, why would a person need scared money in the middle of the night?
02-25-2013, 05:50 AM
Some states have cracked down on the rates that would easily exceed 900 percent annual APR.
I have noticed radio and television ads for an Indian reservation offering loans. It says right in the ad that the money is expensive to borrow, but it costs less then payday loans.
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