In states with no limits, the average annual interest rate on payday loans is around 400% and reaches 664%. Every day, people are devastated by the debt trap that payday loans represent. They go to payday lenders because they need short-term cash and end up stuck for months, even years, paying big fees on small loans without being able to pay them off once and for all. Driven by fear of checks being returned or by the false threat of prosecution, fast borrowers are forced to pay loan fees before paying basic living expenses, such as rent, mortgage or electricity.
As a graduate student in the North Carolina Triangle area, Allen King* had a hard time paying off the four payday loans he had accumulated, since lenders didn't offer installment plans. He studied the abusive behavior of financial institutions in college and said that he would never have recommended quick loans to anyone, but at the time he felt that he had no other option. Edith, a single mother from Asheville, North Carolina, cut back on her family's purchases, stopped driving her car and kept the lights off to save electricity while she struggled to pay her quick loan payments. However, if you're mired in despair and are thinking of visiting a nearby lender near you, think again.
It's also illegal for a debt collector to collect or attempt to collect a quick loan in the state of New York. Juliette said she was embarrassed to ask for help when her financial situation led her to apply for quick loans, but she recommended that people seek support from community organizations or friends and family before applying for a quick loan. Fraud related to home equity loans occurs when someone convinces a homeowner to apply for a loan that they don't need or that is larger than they need, or has higher interest rates and fees and higher monthly payments than they can afford. A woman from Greensboro, North Carolina, lost an opportunity to buy a home from Habitat for Humanity because of her payment debts.
Fast lenders are more likely to be established in low-income neighborhoods and communities of color. While a cash advance can be made as an advance on future legal profits, pensions, inheritances, insurance awards, alimony, or real estate income, the most common cash advance loans are payday loans and advance tax refund loans. Payday lenders come in the form of brick-and-mortar stores around the corner, the mobile phone app, and fast online cash types. When Smith had financial problems with payday loans, he began using the neighborhood food rack to help feed his son. Frantically trying to manage her accounts, Sandra eventually found herself with six simultaneous payday loans.
He worked just down the street from the payment store and, because he was short of cash, he called to see what he needed to get a loan. Biebighauser said that, in an Exodus Lending discussion group, borrowers described a “fast track” at some payday lenders for regular borrowers.