Protect Yourself When Working With Payday Lenders
February 7th, 2011 | 
Author: There are so many critics out there that accuse the industry of being predatory and say that payday lending preys on the middle class American and it’s goal to cause more debt, and make more money on delinquent loans. But a lot of times, it can cost more money trying to get a delinquent loan paid off by a customer.
It simply does not make sense to want to cause people to be unable to pay their loans. Payday loans make money on the interest rate that is charged, just like any other loan. Their rate is quite high when compared to normal long term loans, but even that is not fair to compare because the rate is only meant to be applied to a loan that lasts a couple of weeks.
Many people are willing to fork that over for easy money in quick time. It is true that if a person does not pay their loan back that that interest rate carries on and then the loan becomes quite expensive. But that is not the fault of the lender, the responsibility lies with the borrower.
This gets expensive for all parties involved. Perhaps some borrowers aren’t aware of everything they are getting into when they get a payday loan. There are some unscrupulous lenders out there, just like there are scam artists in every industry.
Though usually, the problem lies with the borrower who did not think before they signed a contract, or perhaps didn’t read the fine print and understand what they were getting into. And sometimes there are others who have every intention of paying their loan back but something else unexpected occurs and they are unable to do so.
One thing to consider is that payday loans don’t advertise their loans for frivolous purchases like weekend vacations, or shopping sprees. The information that goes around, articles that are written and even literature in a payday lending office, all revolve around the fact that their loans are for immediate, urgent circumstances.
Banks don’t deal in small cash as frequently in regards to loans. They do work with smaller loans but most have a minimum that they will even process for you. Sometimes finding an institution to loan you $200 for car repairs or medical expenses can be hard, then a payday lender is a great option in this situation. Many people find this a great relief when life throws curve balls.
There are ads everywhere for obtaining credit but not advertising the interest rates and hidden fees that go along with such credit. It can be wise to pick a payday lender who is held to the Truth in Lending Act, requiring them to be upfront with all their fees and costs.
If you need a loan, make smart decisions with what lender you pick. Know what you are getting into and most of all help spread the word that this industry is not intentionally causing harm.
Here are some tips to ensure you have a legitimate and great experience with obtaining a payday loan.
Find a lender in you country, do not borrow overseas because laws are different in other countries. Whatever state the lender is in that you choose, take 10 minutes and research the specific payday lending laws. There are also different minimums and maximums for borrowing for each state as well.
Ask what the fees and interest rates are if you can’t see them clearly on the website. This could be a red flag too however, so use caution. Ask what payback schedules they offer. Some people only get paid once a month instead of every two weeks.
Know how much more you are paying in fees and interest than what you actually need. For instance, if you need $200, know how much more is being borrowed to pay for this service. Know your payback schedule and don’t default! Otherwise, all those fees and interest rates will change and you may not know how it got so out of control.
Read your contract. Have a good plan on how to pay it back and when. As you can see, there are ways to protect yourself from getting into debt you really don’t want. As long as you have all the information and sign your name on the line, you are responsible for the money you borrow.
About the Author
Jack R. Landry has a PHD in financial services and has written hundreds of articles relating to consumer services and payday advance. He has been a consumer advocate for nearly 25 years.
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Jack R. Landry
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