What most people don’t take into consideration is the amount of interest that’s charged on these kinds of loans, and the money is due in a short period of time.
For anyone in a financial bind – such as the furloughed and unpaid workers of the longest U.S. government shutdown – turning to a payday loan may be seen as the solution. Proceed with caution!
Bruce McClary of the National Foundation for Credit Counseling said those who took out these kinds of loans need to understand that payment on those payday loans is due very soon. He advises individuals to look at the loan’s terms to learn when the repayment is set for.
The majority of states have passed payday loan rules that stipulate lenders must comply with certain rules to protect people from the deceptive practices the payday loan industry is known for. This also includes online lenders.
A payday lender operating in Washington state must be registered and licensed with its Department of Financial Institutions. The maximum payday loan a person can get in Washington is $700 or 30 percent of a person’s gross monthly income (depending on which one is less). A person is permitted to have eight or fewer payday loans in one year’s time with only one loan from a lender each time.
A loan term cannot exceed 45 days, with no more than 15 percent on the first $500 with 10 percent being charged for anything more than that.
Of course, payday loan lenders don’t always follow the rules and participate in some illegal activities such as not getting licensed, forcing people to take the automatic payment option from their bank accounts, not telling people the truth about the costs and threatening them with lawsuits and jail.
McClary said many out-of-state lenders are not registered and licensed to operate in a person’s state, which means they can charge interest rates of 500 percent or more. According to regulators, these penalties and late fees can result in owing back much more than a person initially took out. This also includes bank overdraft fees if the payments are processed out of an account.
For those federal workers who used a payday loan lender, McClary advises them to seek out a loan from their credit union or bank to pay the payday loan off immediately.
Read Also:
How an installment or payday loan in Illinois can help you get the funds you need to deal with an emergency.
More information about cash advance in Indiana.
