Just curious

[knotme]

Do you know anyone who has taken out a loan from one of those "payday Loan" places. I know it is totally robbery on their part but I guess some people are really desparate for money.

Like I said, Just curious.

[angrypuppy]

I hope people that rely on those places find a way out of the viscous cycle. Don't start.

[IntlMom]

please tell me you are asking hypothetically

[Mom23boys]

Yes, I do know of someone who has taken out a payday loan. He is actually a teacher and gets paid once a month. It is sad because it has become a cycle for him. He pays off the loan and then has to turn around and borrow more money to make ends meet for the next month. He can't figure out how to get out of the rut without getting behind on his bills. The interest rate is a killer!!!

[yankeegal]

There is one of those payday places in the shopping plaza where I sometimes grocery shop and it is always packed. Sad.

[knotme]

thanks for the replies. I won't ever do that. We are actually doing great financially. I was just curious. (like I said in the title of the thread)

[frugalandsimple]

I don't know anyone who does that. Those things shouldn't exist. It's a terrible place to be sucked into.

[FrugalMomof3]

My one friend used to do that years ago, I personally have NEVER done it, nor I ever will.

[suebeehoney]

For the past 2 years, I have worked with a website that helps people get out of debt, and one of the major issues we tackle is payday loans. The site is run by consumers who have run into debt/credit issues or have dealt with the payday lenders first hand - they came to the site for help, found it, and stayed on to help others with what they've learned. We research our answers to questions carefully, so as not to give out bad information.

There are legal, licensed payday lenders out there, but the state laws that govern the payday lenders are more lender-friendly than consumer-friendly. Some state laws allow unlimited interest - they literally don't put a cap on it. They don't put a limit on the number of loans a person can take out at one time, etc. In those states, the consumer is totally screwed.

The interest rate on even the legal payday loans can be as high as 400% APR - and that's legal. The illegal ones are higher. The way they hook you in is by showing the APR broken down according to your loan term (usually 2 weeks) - then it doesn't look so bad to the uneducated consumer. If they can walk out with $600 in their hands for some immediate need, they're probably thinking that $60 for two weeks' interest is not so bad.

Cash Call out of California charges exorbitant rates. However, they are not a payday loan - and can't be treated as one - they are an installment loan, backed by a bank out of Delaware - and therefore completely legal in the interest rate they charge - which is akin to highway robbery. If you borrow $2000 from them, you will be repaying it for 5 years, and will end up repaying close to $4000, including interest. This company's collection tactics are ruthless, and they will not hesitate to take a person to court if they can't pay.

There are also ILLEGAL payday lenders - most of them work via the internet rather than have storefronts - and most of them are not even located in this country. There's a big one in the UK that is absolutely vicious and very difficult to get rid of. They will tell you they don't have to be licensed in the US to lend here. The illegal lenders are the ones we tackle head on and get the states' attorney general and the BBB involved.

These illegal lenders will stop at nothing to get your money. They will disappear and not answer their phones so you can't contact them to arrange payoff of the loan. They will bombard you with phone calls day and night, and at your place of work. If they can't reach you, they will speak to your co-workers or supervisor, and will tell them you owe their company money. They'll contact anyone you list as a reference on your application, and tell them you owe their company money. They have even been known to contact consumers who have paid off their loan up to 2 years ago, and tried to convince them that they forgot to pay a portion of the loan, and that they now owe thousands of dollars. They will debit your bank account relentlessly - and if you block their debit with the bank, they will send through a phony 'paper check' (aka an electronic presentment) to get your money - or they will debit your account under another company name, or change the dollar amount slightly so that it will get past the block you put on them.

These are just a few of the tricks we've seen these companies pull. Mind you, these are the illegal companies. However, the legal companies can be just as ruthless - they can and will take a consumer to court if they don't pay off their loan on time.

Sorry to babble on - this is a hot topic for me, one that I'm passionate about. I would love to see the payday lending industry shut down completely. To my way of thinking, there is no such thing as a 'good' payday loan. They are all a form of highway robbery, if you ask me. They lend enough that the consumer has to use their entire paycheck to pay it back - then there is no money for bills, food, etc. - so the consumer takes out another loan - it never ends.

The bottom line is, if anyone is even thinking about taking out a payday loan - DON'T. You will regret it in the long run.

[MomToTwoBoys]

I know those places were banned by the US military. I had some buddies of mine that got into some hot water with one of them, and one guy even went to prison for bouncing checks.

[knotme]

Thanks for the replies. Very interesting reading. I was thinking maybe 25% interest, but 400% or more

[Wendy99]

A single mom in our neighbourhood admitted "having" to go to one of those places. Her fridge broke down and with 2 young children, no savings & being behind on the rent, she felt there was no other option to purchase a new fridge. IMO she should have looked on freecycle or purchased a used fridge, but who knows!

[MOMMYDEAREST]

WOW......400% interest......Holy Cow!!

[JustMegan79]

I had a friend back home, she was a waitress like me except she was a single mom with two kids. She used these places every week without fail. She would borrow from one to pay another,...and on an on it went.

I felt bad for her on one hand, but on the other her kids had all new brand name stuff, so did she. Very expensive junk bought at all the fancy stores.


Just demonstrates how poor spending choices and a keeping up with the Joneses attitide can destroy your financial future.

[C@rol]

I don't know anyone who has but from what I've read and seen on the news you don't want to get involved with it. It's loan sharking at it's finest.

Don't do it!