Let’s face it…you got into a bind. You needed a quick infusion of cash. You went to a money broker, commonly called a Pay Day Loan or Cash Advance. Wikipedia says that the definition of a pay day loan is ‘a small, short-term unsecured loan”, “regardless of whether repayment of loans is linked to a borrower’s payday”.
The consumer walks into a shop or goes online, and secures a small loan against their next paycheck. Some requirements need to be met such as proof of a job, etc. The borrower is required to give the Pay Day Loan company a post-dated check for the repayment amount. If the borrower does not appear on the correct day with the funds, the company can cash the check. If funds are not available, then the consumer faces additional charges like bounced check or insufficient funds fees, etc. In many cases, the company has penalties for not paying the loan back on time, so the fees and charges keep piling on the consumer.
The problem with pay day loans is “usury”. Usury simply means an unreasonable and excessive rate of interest. In the United States, this type of loan is prohibited in some areas, and regulated in others. And in many other areas, especially in the Tribal Lands areas, no regulations or very little are required.
If a consumer really needed a cash infusion of say $100, and truly intends to pay it back when they get their next check, then this practice can make the difference between getting medical help, and other such catastrophic uses. But what happens all too often is the consumer does not pay the $100 back in the timeframe they intended.
Let’s look at a typical scenario for that $100 loan. If the cost is $15 for a two-week loan, then figure the annual percentage rate this way: 52 weeks in a year divided by 2 because it is a two-week loan period. 26 weeks times 15% ($15 is 15% of $100) = 390% annual percentage rate. If the consumer pays the loan back within a month, plus the cost, then the interest rate can be 15-30%. However, the longer it takes, the more interest.
This type of loan is considered predatory. However, there usually is no collateral…it is considered an unsecured loan. Therefore, a percentage of people default on these types of loans.
So what do you do if you have one or more pay day loans right now? The interest you are paying continues to accrue, and you can’t get ahead. We have an answer. Pay Day Loan Consolidation. The company we work with has an excellent reputation for solving these types of problems. Once you enroll with no up-front fees required, the company goes to work on your behalf. They negotiate with these lenders to reduce by up to 600% the interest rates you are paying, and in some cases, get the interest rate down to zero. They also get your monthly payments reduced. Then they consolidate all these loans into one payment to make it easier for you to be sure you make this new payment on time. The cost for the program is low, in order to help as many people as possible get out of this situation.
The benefits of consolidation can be felt almost immediately, including:
Why not contact us today to find out how this program can assist you in ridding yourself of these types of loans.