The payday loan or cash advance business is a billion dollar industry that continually fights governmental regulation, somehow keeps finding loopholes to stay open and to keep the already strapped consumer in a debt cycle that is virtually impossible to get out of. Could this possibly be you? Then keep reading.
The first time you use their system it is wonderful, you get the cash you need then in a very short period of time from 2weeks to a month you are paying back an absorbent amount of fees. Unfortunately many individuals do not attempt to figure out how to get out of a payday loan debt or how they operate.
They get caught in the cycle and then are forced to go to another payday place to borrow to pay back the first one. So the “deeper in debt with no way out” cycle begins for the already struggling hard worker. People on a fixed income such as social security are really affected by these places.
I know an individual who actually works at one of these places and this person spilled the beans of how they handle some procedures.
Here are just a few comments from the employee on how these payday loan places work…
- They say they have the best interest of the customer, but in actuality they are just out to for their own benefit of drawing as much money (fees) into hands as possible.
- They say they can get folks more money, yes they can but they don’t tell you about the consequences of getting in the cycle
- People are desperate for money and when they go into these places they are told the basic information and are shown a chart of the money you can “leave with today”. To the customer this is a temporary life jacket, they are not thinking about how they are going to repay (they will figure that out tomorrow)
- The exorbitant fees keep you in the cycle and it is nearly impossible to get out of
- The majority of individuals who frequent these places go to an average of 3 places, to borrow from one place to pay the next place, and so on.
- They will literally loan to anyone that has a pulse, not caring if the customer is over extended
- They are in the business to loan money with high, high, high fees….. shall we say legalized loan sharking?
Talking with this employee who has worked there for a number of years on the inside, she tells me how they are required to draw people in, to call people to come back into their stores and offer them some stupid incentive such as receiving a $20 bill just for taking out another loan. Really? So if you have paid off the loan, they are attempting to get you back into the cycle again.
Some individuals have truthfully stated that they have more than five loans out at a time. Lets figure this out. If you borrow $500 from 3 different places on a 2 week payday cycle and they charge $75.00 to borrow …. just in a month’s time that is a whopping $450.00 just in fees and interest alone!! Even having one $500 loan with a pay back amount of $575.00 every two weeks, that is $150.00 a month that you are literally throwing away! Think of the things you could be doing with this extra money!
- Remember you are responsible for your own actions, do you really need to borrow this money or can you find different options, different avenues to take?
- Understand the real cost of borrowing the money. They do charge over 300% annual percentage rate, and they will continue to do it on regular basis, because you allow this to happen!
- Pay off your loan as soon as you can, for some people just reducing the amount they borrow each time gets them out of the system
- These places now have you set up on automatic withdrawals from your checking account. Find out how to stop the automatic withdraw. If you go to these places they will have you sign an automatic revoke form to stop automatic withdrawals from hitting your account.
- Call the advance place you have a loan with and ask them if they are willing to work with you to payoff the loan with a set payment. Some of the places allow this and will not charge any interest.
- The Consumer Financial Services Association (CFSA) guidelines allows a payday loan customer the opportunity to be placed into a restructured payment plan and with keeping up with scheduled payments you will not be turned over to collections. Check them out.
- You can check out the credit counseling agencies. Start in your local area including local churches and organizations
- Make every attempt to get a lower interest loan through your bank or credit union
- There is also the option of debt relief. There are legal solutions you can look into that covers such areas of debt settlement, debt consolidation, debt negotiations and other avenues. Just make sure you work with one that is a top rated company and that has excellent customer reviews
- If nothing else, you could stop paying, I know for a fact that some of these places will just write off an account that has stop paying and will do nothing with it accept to make occasional phone calls to see if they can get you to come in to make a payment. At this point all you have to do is give them a promise to pay date and they are satisfied with that, or give them a long drawn out hardship story of how you can not pay. They will eventually stop calling and also they do not report it to the credit agencies. (here is a clue, their initials are AA).
The only issue here is that some time down the road, from 2 till 5 years they could at their discretion sell your bad debt to an outside agency, and then those agencies will be over aggressive in collections and end reporting it to the credit bureaus.
My personal advise is to run, run as fast as you can away from the payday loans, the cash advances. the title loan that they offer for a short 2 month period at again an exorbitant rate.
The biggest trap of all times is an installment loan where you pay back over a set amount of time. Here is a true example of an installment loan: you borrow (if you qualify) $2,500 dollars and depending on the payment arrangements you will be paying back $7,000 to $10,000 dollars. If this doesn’t hit you hard in the head, then you should be ashamed of yourself.
I have given you a few true examples of how to get out of a payday loan debt, and now it is totally up to you to take responsibility and figure out what is best for you. Get your financial affairs in order, a good place to start if you can do any of the above suggestions is to get connected with financial expert Dave Ramsey. You can get total advise and do your own money makeover.
Get going and do something about it, this issue will not entirely go away, it will come back to haunt you at some point if you don’t take care of it right now. . Again your first priority is to take responsibility for your life and then learn to build your financial future.
Never Stop Learning…Angela