In these tough economic times, people often become desperate to bills. Many Americans have re-joined the work force after lay-offs making dramatically less than they did before. These lower salaries have many struggling to catch up on bills such as car rent, car loans or mortgages. The threat of eviction, repossession or foreclosure will force some to take drastic measures to avoid these fearful processes. One group of organizations that attempt to take advantage of the misfortunes of others is payday loan companies. Payday loan companies can be found all over the internet and there are some things that potential borrowers need to know about these companies before using them.
Payday Loans Are Illegal In Some States
The internet provides many companies access to people that would otherwise be untouchable. Payday loan know to take full advantage of this. I live in Georgia which is one of many states where payday loans are strictly prohibited and prosecutable as racketeering. I went onto the internet for a mere 5 minutes of research and got in contact with at least 10 companies that were willing to give me a loan knowing full well that I was in the state of Georgia. One representative even told me “You could be in Alabama for all I know!”
Not All Payday Loan Websites Are Lenders
In fact many of the alleged Payday Loan companies sites you find are actually lender matching sites that send provide your information to various internet membership companies. I applied with one Payday loan website and my checking account was charged a $49 membership fee for a discount club that I have never heard of. When I contacted the Payday Loan website owner their representative said “you have to call them”. When I told the rep that I never contacted them and expected her company to fix it she replied “You should be more careful with your information!” Upon researching the site, I discovered that they are not a lender at all and there is fine print on the website that you have to carefully read.
Payday Loan Companies Charge Outrageous Interest Rates
This is the main reason that many of these companies have been banned. There are horror stories of some of these companies charging an equivalent of 3,000% interest on loans. In one story a woman paid $3,600 in fees on a $500 loan over the course of two years. The companies trap you by letting you pay a fee to rollover the loan to your next payday and add to the balance of the principal.
Payday Loan Can Get You Into Collection Scams
Many customer of Payday Loan Companies find out that these loans can come back to haunt you years after you pay it off. Some former customers are reporting getting bogus collection calls from payday loan companies saying that they never paid the balance in full and as a result they owe the balance and the interest that has accumulated on the balance.
Although these companies may seem like a saving grace to many consumers who have no other alternative, the risk of these companies can be far too much to chance. If you have to use one of these companies, be absolutely sure that it can will not be a long term solution and research the company using online tools and the Better Business Bureau, but remember that when something looks too good to be true, it usually is.