Payday Loans are a quick way to get the money you need for an unexpected expense. A person can borrow the money needed, but there is also a fee attached. First, customers begin by filling out registration forms, bringing their ID, pay stubs, and bank info. A customer can borrow in amounts ranging from $50-$1,000 depending on state laws.
Payday loans are due to be paid by the customer’s next payday, hence the name. To a person in need of money, this would seem like a rather good idea. However, in dealing with loans such as these, borrowers can encounter some major problems.
For instance, there is the interest rate. The APR interest rate for payday loans range from 391%-521%. Due to this interest rate, a borrower can spend a lot more on this loan than they originally anticipated. Another problem is that people don’t have the money to pay their debt by the two weeks. The lenders count on this and give people the option to roll over.
This means that a person now has to pay the original loan and finance charge, adding on another finance charge as well. It is easy for a person to lose track of their finances in this way; especially since a person can have a huge debt and not know how they ended up there. This is especially true considering that lenders have access to the borrower’s bank account. This puts people in a deeper rut since the lenders take their money on payday before other bills can get paid.
This problem also goes beyond just mere borrowing and lending. Payday lenders also target various groups of people such as minorities and low-income families. The payday industry plays a big role as well. There are payday loan places almost everywhere, enticing people to come in and do business with them. They are often marketed as an option for financial freedom. This is far from the truth.
The payday lending industry is in the billions. Not only does this industry steal from citizens, but it also works in other nefarious ways as well. The industry help pays off politicians to make laws that end up keeping the machine running. There are even reports of academic research on payday loans being edited. This is all in the backdrop of regular citizens being crippled by the burden of seemingly endless debt. A payday loan can seem like a promise of hope, yet it can turn into a financial nightmare with no end in sight.