When talking about lenders that are truly predatory, a product that quickly comes to mind is Pay Day loans. These loans are designed to lend money to potential customers that are running a little short on cash until there next pay day. The qualifications for these
loans are as follows,
1. Must have a open checking account
2. Must be employed for at least 180 days
3. Must be 18 years of age
4. Must get direct deposit
5. Must have at least 3 references
No credit check is needed and the loans are advertised and market in low income communities. The interest rates on these loans can range but for the most part they can be upwards of 75% on the dollar. For example, a potential customer will walk into a store and get a loan for $300.00 dollars. This loan will cost him $85.00 dollars. This amount must be paid in full by the potential customer next pay date. The total cost that is due is $385.00 this amount will be taken from the customer checking account. It will be electronically withdrawn on the pay date that was provided by payday lender. Collection on the loans is normally within the same week the customer has borrowed it. Keep in mind if you took a payday loan out on Monday Feb 1, 2010 for $300.00 then on Friday Feb 6, 2010 $385.00 is due.
Nevertheless, the lender is counting on, you to still need the originally amount of money you required. Which is the $300.00 dollars, if notified by the lender 24 hours before loan is due the lender will reinstate your original loan of $300.00 dollars with you just paying the $85.00 loan fee. This can continue as many times as the lender needs it. The sad part about this type of lending is, the market targets the poor and disenfranchised. One loan will take the average poverty stricken home 6 times browning the same $300.00 loan with an $85.00 reinstatement fee before it's paid in full. The lender on average will pay back $510.00 dollars in reinstatement fees before it pays back the original balance of $300.00 dollars. This will cost a poor family about $810.00 for a $300.00 dollar loan. This type of dollar amount can cripple a family that is under the poverty line to begin with.
Furthermore, in many states this in not allowed. Pay Day Loan Debt have become a concern of the United States Congress. Laws are currently being passed to regulate this type of lending to the poor. There are many states that don't allow this particular lending at all. There is public safety warning along with Loan Consolidation programs to address this type of exploitation of the disenfranchised.
In addition, more 1 billion dollars in profit last year alone in Pay Day Lending, while many of their customers lost everything trying to pay back one loan. Often the desperation of the lender drives them to take additional loans from other Pay Day Lending institution to pay back one loan, which starts a spiral effect. This affects families and communities. Pay Day Lender have no regards for the customers in which they lend to, Pay day lenders are truly the Modern Day Loan Sharks.
For more great information on Eliminating Pay Day Loan Debt and the Free Mini-Guide! "Five Secret Words to Ending Harassment," please visit
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