Real PDL Help

Payday Loan Assistance

Dangers of Payday Loans

Home » Archives for Dangers of Payday Loans

Categories

COVID-19 Could Push You Towards Payday Loans — Here’s Why You Should Resist

The impact of the coronavirus pandemic is being felt across the country. Whole cities are locked down. The economy is contracting. Millions of Americans are furloughed or have lost their jobs.

What effect has all this had on people’s finances? A recent survey confirms what we intuitively know. People are spending far more than they usually do on supplies and food. Many are taking money out for their savings to meet day-to-day expenses. With cash running short, individuals are even turning to high-cost sources like payday loans.

How bad is the problem?

It’s probably worse than you can imagine. Consider the unemployment numbers. About 30 million people have filed for jobless aid in the past six weeks. Experts think that more Americans will lose their jobs before the COVID-19 crisis is over.

Unemployment Claims Surged Due To Coronavirus

Source: CNN Business

The GDP numbers are even more revealing. US GDP contracted by 4.8% in the first quarter of 2020. Kevin Hassett, the senior economic advisor in the Trump administration, says that the second quarter’s figures could be “… something like minus 20% to minus 30%…”

Rising joblessness and an economy going into a tailspin could leave individuals across the country desperate for cash. Where will they find the money they need?

Payday loan companies could see a surge in business

There are about 23,000 payday lenders in the US. So, it’s easy to access these loans. People who need funds can walk into a nearby payday loan store and make a loan application.

But what about the “shelter-in-place” orders that restrict the free movement of people in much of America? That isn’t holding payday lenders back. In some states, payday lenders are classified as “essential” businesses. They can continue to function despite the lockdown. And payday loans can be approved and disbursed online.

Despite their easy availability, stay away from these loans. A report in MarketWatch, a website that provides financial information and business news, points out:

Payday loans are generally not a good idea — most financial advisers say to avoid them at all costs. 

Why shouldn’t you borrow from a payday lender? There are two big problems:

High cost of borrowing: To understand how much a payday loan can cost, let’s consider an example. If you receive $100 from the payday loan company, you could have to pay a fee of, say, $15. That doesn’t seem like much on a $100 loan. But the $15 fee is for borrowing the money for only two weeks. It works out to an annual percentage rate of almost 400%.

The money you borrow from your credit card company costs far less. Credit card APRs usually range from 12% to 30%.

Most borrowers renew their payday loans: You may think that paying $15 for a $100 loan isn’t too bad. The APR may be high, but in dollar terms, $15 is reasonable. However, the issue is more serious than that.

According to Consumer Financial Protection Bureau (CFPB) data, three-fourths of payday loans are taken by people who have borrowed 11 or more times a year. They borrow repeatedly because repaying the first loan leaves them with little cash for their immediate needs. Typically, repaying a $200 loan could mean paying the payday lender a total of $1,000. Your costs and fees could be several times your original loan amount.

Taking a payday loan could mean getting trapped in payday loan debt. So, it makes sense to keep away from payday loans altogether.

But what if you’re already in debt to a payday lender?

Repaying your existing payday loans

Getting out of payday loan debt in normal times can be bad enough. But escaping from your payday lender when the coronavirus pandemic is raging could be even more difficult.

Fortunately, there’s a way out. At REAL PDL HELP we’ve developed a payday loan consolidation program that can help you to get out of debt.

What are the benefits that payday loan consolidation offers?

  • All your payday loans are combined into one loan. So, instead of paying multiple lenders, you need to make only one payment.
  • We’ll negotiate on your behalf with all the payday lenders. There will likely be a reduction in the total amount you owe.
  • Our negotiations could also mean you pay a lower interest rate on your outstanding loans.
  • Best of all, there could also be a reduction in the sum you must pay every month. This will be achieved by extending the repayment period.

How will payday loan consolidation work in your case? Contact us for a free consultation, and we’ll quickly review your details and provide a step-by-step plan.

Final words

The COVID-19 crisis could have a huge impact on economic activity and employment. If this leaves you short of funds, the worst thing you could do is to turn to a payday lender.

But what if you’re already in payday loan debt? REAL PDL HELP’s loan consolidation program could provide the solution you’ve been looking for. Contact us to find out more.

If You Owe a Payday Loan, Can You Get Another

The chances of getting a second payday loan before paying off the first one is very low. Lenders can see that you already have a loan and will not approve you for another. There are some payday lenders that will extend a second loan, but you don’t have to dig too deep to realize why getting a second loan could be seriously detrimental to your finances and overall well-being, and no, we are not being too dramatic here. Let’s take a look.

A payday loan, sometimes called a check advance loan or cash advance loan, seems like a harmless and easy fix. You are a little short on cash and have some important bills to pay. A payday lender can get you cash quickly, usually $500 or less, without much hassle or a credit check. While the extremely high interest rate of upwards of 400% should alarm you (in 2017, the average personal loan interest rate was between 10% and 28%), you are committed to paying it back by your next paycheck. But what happens if two weeks roll around, and you don’t have the funds to do it.

Example: Take out a loan of $500 with a two-week term and an interest rate of 400%. If you don’t pay it back by the two-week deadline, you will now owe the original $500 plus interest, and the cycle continues if you continuously do not pay back the loan.

Lenders will generally not give you another loan to pay off the first one, but they might extend the terms of the first loan or increase the amount if you call them and explain your situation. The problem is that issuing a second loan is not necessarily an act of kindness. You will now will undoubtedly, plunge yourself further into a debt spiral you may not get out of.

Taking our example above, if you requested a loan extension on your loan due date, you’ll owe your original amount plus interest. To extend that loan, your lender will likely charge you a fee of $25-$45. In addition to that amount, it is likely that you gave your lender permission to pull the original loan amount from your checking account, which will likely put your account in a negative balance. Any checks or bills paid from that account that bounce, will occur a Non-Sufficient Funds (NSF), which average at $35 for each check that bounces. If in our example, if you bounced four checks, you would need to add another $140 to your debt.

While creating a budget and figuring out where you can cut costs are you two main goals, if you are considering extending your original pay day loan, one can assume that you are in a precarious situation and need money quickly. Rather than trying for another loan, consider other options:

 

  • Offer to run errands or perform odd jobs for family, friends and neighbors.
  • eBay: Sell anything from books to clothes to toys to car parts to car parts online.
  • CraigsList: Much like eBay, you can sell anything, but folks will pick it up locally.
  • Sell items at a pawn shop.
  • Have a garage sale.
  • Field Agent: An app that you download to your phone that pays you to complete jobs like checking prices and scanning bar codes in stores.
  • TaskRabbit: This site connects you with local people willing to pay you for a wide variety of tasks — from light carpentry to picking up takeout food.
  • Thumbtack: Similar to TaskRabbit, this site is also for people looking for help with odd jobs or professional skills in home improvement, education or wellness.
  • UserTesting.com: They will pay you $10 via PayPal for every 20-minute video you complete by looking at websites or apps, completing a set of tasks, and speaking your thoughts aloud.
  • Uber, Uber Eats or Lyft:  If you’ve got a car, put it to use with this service that’s an alternative to taxis and food delivery.

 

Ultimately, the best thing to do if you find yourself buried under debt is to contact a loan consolidation company like Real PDL Help and work with experts who have decades of experience helping everyday people with their finances. Even if your initial loan was small, you can see how it can quickly swell into an amount far beyond your means. The counselors at Real PDL Help will work with both your lender and you without judgement to help you pay back your original loan and set yourself up for future success.

A loan consolidation company will:

  • Guide you through the process of getting payday lenders out of your bank accounts.
  • Help you establish a budget, based on your income, that will enable you to settle all your payday loans.
  • Consolidate your loans and reduce your debt so that you aren’t piling on fees and debits.
  • Resolve your payday loans once so you can move on with your life.

 

What Happens if You Don’t Pay Back a Payday Loan

If you took out a payday loan, it was probably because you needed a quick influx of cash, perhaps to pay a bill or take care of a repair. The loan was fast and easy to get, and immediately solved a problem. The problem with payday loans is that it only takes one missed payment to immediately send a borrower into a spiral of debt. With interest rates as high as 400%, a new charge every time you extend the loan and potential subsequent fees from your bank when they make automatic withdrawals from your checking account that you can’t cover.

As unfair as these tactics may be, there is no way to make a payday loan go away.

What happens if I ignore paying back my loan?

Most likely you will see attempted withdrawals from your checking account since you gave this lender permission to do so when you originally signed up for the loan. If you cannot cover the withdrawals, your bank will charge you a Non-Sufficient Funds (NSF) fee every time your balance is insufficient, which means every time a check bounces, whether it’s for $7 or $700, you will incur a fee, generally around $37 a pop.

You, and potentially, your friends and family, will start receiving calls from collection agencies trying to recoup the amount you owe. Some may even show up in person at your home or work.

You will likely be taken to court, and if you are ruled against by a judge, depending on your state’s laws, your wages can be garnished, and your current property repossessed – or any property you acquire in the next 10 years, if the loan is not paid off in full.

Because defaulting is not a crime, you cannot be sent to jail, despite what some collectors may tell you, and some of them may get aggressive with their threats. The Fair Debt Collections Practices Act is a federal law that prohibits collection agencies from using abusive, unfair or deceptive practices to borrowers. Some of the infractions include contacting you outside the hours of 8 a.m. to 9 p.m., call you at work, verbally abusing you or calling your friends or family to collect on a loan.

If you feel you are being harassed by a collection agent, register a complaint with your state’s attorney general or the Consumer Financial Protection Bureau.

What should I do if I cannot pay my loan back

First things, first: do not ignore this situation. If defaulting seems inevitable, contact your lender before your payment date to discuss terms. If you feel that you will be unable to negotiate, take advantage of a free consultation with a loan consolidator like Real PDL Help. These professionals have years of experience and expertise in helping everyday people consolidate and negotiate their debt, reduce stress, create a budget and get out from under loan debt.

The payday loan consolidation process is simple and will put you in control. The experts will:

  1. Work with you to establish a budget to determine what payment plan you can afford and how to get you or your family out of debt.
  2. Get the lenders out of your bank accounts.
  3. Contact your lenders.
  4. Educate you one-on-one so you can have the confidence to move forward in your life.

Will Payday Lenders Take You to Court?

Called by many names, payday loans, deferred deposit loans or check advance loans are short-term, high-interest loans that are usually for $500 or less and are appealing to those who need a quick fix until the next payday. However, with rates that can be as high as 400%, it’s unfortunately fairly common for borrowers to drown under the quickly mounting debt that come with payday loans, making it difficult to repay and recover.

If you don’t pay back your loan, also known as “defaulting” on a loan, there are many consequences including automatic withdrawals from your checking account – and the subsequent aftermath, such as NSF (Non-Sufficient Fund) charges – a hit to your credit report, repeated calls from collection agencies and a lawsuit. Yes, a lawsuit.

It is very likely that you will be sued in civil court for the overdue amount, even if it is for a small amount. Don’t think for one second your loan is “too small” to be bothered with. Additionally, once a court judgement has been issued, your property can be seized and sold to pay off your loan. Because judgements are viable for 10 years in most states, any property that you attain within the next decade can be used to satisfy your debt, as well as bank account levies and wage garnishment.

A word of caution, never ignore a court order. If you don’t appear in court to discuss a settlement plan, the creditor can now go after you with the backing of the legal system.

While payday lenders can take you to court, it’s important to understand that failure to pay back a payday loan is not a criminal offense, and you cannot be sent to jail, unless you deliberately took out the loan with no intention of paying it off.

Yes, a lawsuit is possible, and even probable, but threatening a borrower with a criminal arrest or jail time is illegal under the Fair Debt Collection Practices Act. Callers may even identify themselves as law enforcement officers or say they are reaching out on behalf of a government agency or law office to allude to pending jail time. Should you be threatened, the Consumer Financial Protection Bureau recommends contacting the office of your state attorney general.

However, there have been some instances whereby payday lenders have been able to use bad-check laws to successfully file criminal suits that mistakenly get through the legal system. So again, never ignore any orders to appear in court because even if the criminal complaint was filed erroneously, civil court orders are legitimate and likely when it comes to loan defaults.

Getting help before or when you get sued.

Knowing that lenders will go after you, no matter the amount, means you shouldn’t fall into the trap pf thinking that you “will catch up;” the extremely high interest rates are designed to almost ensure that you will not. The best course of action is obviously to seek help before you get sued. But, if a court order is the final straw that inspires you take action, we are here to help you navigate that as well. *

As looming financial debt is understandably overwhelming and stressful, the professionals at Real PDL Help are experts at putting your mind – and finances – at ease. As experts in the payday loan industry, we can consolidate multiple loans so you have more manageable payments, assist with your budget so you can ensure your daily necessities are met, get lenders out of your bank account, put a halt to the endless phone calls and arm you with knowledge that will put you back in control.

*We DO NOT charge service fees until AFTER we (a) reduce, settle or change the terms of each debt, (b) have a written agreement in place, and (c) ensure that the creditor(s) have received at least one payment. We are not a law firm, and we do not provide legal advice. Please consult with an attorney if you are seeking legal advice or you have questions about collection efforts against you. Real PDL Help does not offer services in every state. Advance fees are not charged prior to re-negotiating customers debt. Results may vary.

Don’t Let Payday Loan Scammers Ruin Your Day

Everyone goes through challenging times in their life, which might result in considering the option of a payday loan. Some people go through with the loan, while others may fill out an application but never send it through. In either of these cases, your information may be shared with third-party companies. Not all of these businesses are legitimate and respectful of that information – many are out to get your money, no matter what it takes.

Even if you never went through with applying for that payday loan, there’s no telling who has your information from simply starting the application process at some point. That is why it is essential to understand the common payday loans and how to avoid falling for one. These scammers may have your name, birthday, and even social security number – which makes it seem as if they are legitimate. Because of that, you need to know how to sniff out a scam. Here are our tips.

Threatening Phone Calls

One thing that a legitimate debt collector is not going to do is threaten you with immediate arrest. If you receive a phone call and the representative claims that you are required to pay up right then or risk a visit from the police, don’t get worked up. That is what the company expects. If you are concerned you will be arrested, you might consider paying the debt they claim you owe, even if you do not owe it. Instead, ask questions and try to figure out exactly what is going on and if it sounds realistic.

Shifty About Identification

Any debt collector working for a valid agency is going to tell you who they are and the company they are calling on behalf of. If the person calling you will not do this, it is very likely that they are trying to scam you. Even if they do provide a name, that does not mean the situation is legitimate. Do a quick Internet search and see what you can find out about the company. In the case of a scammer, you are likely to find reports from many other people who have dealt with them in the past.

No Validation Notice

When a collection agency representative calls to inquire about a debt, they are required to send out a letter about that debt and the amount within five days. This notice mentions that you have the right to dispute the debt within 30 days of the notice or it will be considered valid. When it is a scammer, they are not going to send out that letter. So, if things seem a little shady already, and no message comes, you are likely being targeted for a scam.

Search the Phone Number

If you have caller ID, it is a smart idea to hit up a search engine, type in the phone number, and check out the results. If it is a known scammer, you will likely find tales from past victims. Sometimes there may not be much information, but the rest of our tips should clear your mind, even if this method goes nowhere.

Requires Phone Payment

If the person calling you refuses to allow you to mail your payment, that is a huge danger flag that the person is scamming you. In this case, they might claim to offer you a reduced amount if you pay them right away. Now, legitimate collectors may also push you to pay over the phone. However, they will also allow you to mail in payments. If you are not sure, even if it is a twinge of worry, do not pay over the phone. Make a payment by mail if the debt collector is real, don’t hand out your credit card number. You will likely come to regret it.

Lack of Payment Agreement

This hinges on the last tip and boils down to not giving out your checking account or credit card information over the phone. You should not agree to a payment agreement without having it in writing. Any legitimate company will have no problem with providing this to you. Scammers, on the other hand, are looking to get access to your money fast and will try to talk you into paying right that second. Don’t fall for it.

State Registration

This varies by state, but in some states the debt collection agency must be registered to engage in debt collection. It is simple to check a search engine and research whether the company is registered in your state. If you are in a state that requires registration, go further. You can search for the state’s Office of Financial Regulation and determine if the collection agency you spoke with is registered in your state and whether that registration is active or is expired. If it is the latter, this collection agency has no right to bother you.

Official Complaint

Have you received a formal complaint or summons? Some payday loan scammers write up fake legal documents to convince victims to pay. In some cases, it may be easy to conclude that the paperwork is false, but in other situations, it may be more difficult. If you are not sure, the best thing you can do is consult with a consumer attorney in your area. They can determine whether the documents are legit. If they are not, you certainly have no reason to pay this fake debt. In fact, it is possible you may be entitled to damages under the Fair Debt Collection Practices Act.

Keep yourself and your money safe by being wary when you get a phone call from a purported payday loan collection agent. If you are not sure whether you owe the money being asked of you, do a little research. It is also an excellent idea to talk with a knowledgeable attorney who can help you determine what the truth is and what options you have. If you have further questions and concerns, contact us at RealPDLHelp.com.

Categories

Get a Free Consultation

* - Required Field

Categories

New! Letters to Creditors

SELECT A LETTER, CUSTOMIZE, AND PRINT IN MINUTES:


New! Debt Calculators

SEE HOW MUCH YOU CAN SAVE:

Map of Payday Loan Laws & Facts: Look Up Your State

WHAT CUSTOMER SAY ABOUT
Our Debt Consolidation

"I have three letters to explain Real PDL Help WOW! I was paying almost $2,000 every two weeks before I found them. Now, I pay $250.00 every two weeks and I finally have money...

Detroit, MI
Read More...

Tags

calculate interest Consolidation cost of loan credit checks creditor debt collector debt consolidation Debt management debt relief debt relief settlement debt settlement debt settlement expert eft finances higher interest how to get out of payday loans how to get rid of payday loans loan loan consolidation payday lenders payday loan assistance payday loan help payday loans payments penalties accrue

GET OUT OF PAYDAY LOAN DEBT

APPLY NOW!