| Payday Loans: An expensive cash advance |
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Andrew
Admin
Cash: $ 467.10
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Joined: 02 Nov 2003
Location: Texas
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| Payday Loans: An expensive cash advance |
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quote:
Federal Trade Commision Consumer Alert
The ads are on the radio, television, the Internet, even in the mail. They refer to payday loans - which come at a very high price.
Check cashers, finance companies and others are making small, short-term, high-rate loans that go by a variety of names: payday loans, cash advance loans, check advance loans, post-dated check loans or deferred deposit check loans.
Usually, a borrower writes a personal check payable to the lender for the amount he or she wishes to borrow plus a fee. The company gives the borrower the amount of the check minus the fee. Fees charged for payday loans are usually a percentage of the face value of the check or a fee charged per amount borrowed - say, for every $50 or $100 loaned. And, if you extend or "roll-over" the loan - say for another two weeks - you will pay the fees for each extension.
Under the Truth in Lending Act, the cost of payday loans - like other types of credit - must be disclosed. Among other information, you must receive, in writing, the finance charge (a dollar amount) and the annual percentage rate or APR (the cost of credit on a yearly basis).
A cash advance loan secured by a personal check - such as a payday loan - is very expensive credit. Let's say you write a personal check for $115 to borrow $100 for up to 14 days. The check casher or payday lender agrees to hold the check until your next payday. At that time, depending on the particular plan, the lender deposits the check, you redeem the check by paying the $115 in cash, or you roll-over the check by paying a fee to extend the loan for another two weeks. In this example, the cost of the initial loan is a $15 finance charge and 391 percent APR. If you roll-over the loan three times, the finance charge would climb to $60 to borrow $100.
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http://www.ftc.gov/bcp/conline/pubs/alerts/pdayalrt.htm
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Thu Feb 19, 2004 2:46 am |
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SamSmart
First Time Poster
Cash: $ 0.00
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Joined: 28 Jul 2004
Location: L.A.
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I know payday loans can be tricky but it helped get me out of a bad time. I had dropped some cash earlier in the week and then needed about $400 in a matter of a few days. The fee was only 10% and it worked out fine on my next paycheck. I felt weird going into an actual store plus it seemed easier to just do things online through cashhelp.com after looking around.
I'm curious what kinds of experiences other people have had using that kind of service. I'd have to say mine was a positive one.
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Wed Jul 28, 2004 4:06 pm |
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Andrew
Admin
Cash: $ 467.10
Posts: 1717
Joined: 02 Nov 2003
Location: Texas
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That's a hefty fee, but when you need cash fast, your options can be limited, and these payday loans apparently can be a saving grace in a tight spot. Things could get quite expensive if you weren't able to pay them back quickly. I've not used such a service, but I'm glad it worked out for you. Thanks for your notes...
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Wed Jul 28, 2004 6:40 pm |
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Doro Ajani
Full Member
Cash: $ 3.34
Posts: 60
Joined: 11 Sep 2004
Location: New York City
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Payday Loans = Loansharking with a license. 
A loan shark, in many cases, will actually give you better rates. Believe it or not.
Doro Ajani
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Sat Sep 11, 2004 2:03 am |
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Andrew
Admin
Cash: $ 467.10
Posts: 1717
Joined: 02 Nov 2003
Location: Texas
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Yep, they are expensive, even if you do repay by the next payday. If you don't and sit on it for a while you will definately be sorry.... $$$ 
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Sat Sep 11, 2004 2:09 am |
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BlankenshipFP
Money Talk Advisor
Cash: $ 79.56
Posts: 390
Joined: 05 Oct 2004
Location: Illinois
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One thing about these outfits that I find particularly egregious is the way that they prey on folks who don't know any better. I am talking specifically about the fact that, within 30 miles of any armed services base, you'll find these places are thick like bugs.
Obviously, they wouldn't be there if they weren't being utilized, so it seems like the armed services should make an extra effort to explain the pitfalls of using these places to their youngest (read that: most vulnerable) members, so that they can make better, more educated, decisions with regard to debt.
Jim Blankenship, CFP�, EA
Blankenship Financial Planning, Ltd.
www.BlankenshipFinancial.com
Standard IRS Circular 230 Notice Applies
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Thu Oct 28, 2004 2:59 pm |
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domskynetlabs
Full Member
Cash: $ 21.09
Posts: 95
Joined: 24 Nov 2004
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This is very true Ive lived by 2 armed forces bases and they were rampart with payday advance stores and used car lots.
quote:
Originally posted by BlankenshipFP
One thing about these outfits that I find particularly egregious is the way that they prey on folks who don't know any better. I am talking specifically about the fact that, within 30 miles of any armed services base, you'll find these places are thick like bugs.
Obviously, they wouldn't be there if they weren't being utilized, so it seems like the armed services should make an extra effort to explain the pitfalls of using these places to their youngest (read that: most vulnerable) members, so that they can make better, more educated, decisions with regard to debt.
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Wed Jan 05, 2005 2:47 am |
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