PayDay Loans are a growing trend in
this present day economy, and Oh how evil they are. The state in which I reside
allows Payday Lenders to register and operate legally. Not all States do, but
in my State, there are as many Payday Loan stores in any given city as there
are StarBucks or McDonalds. It is a crying shame because they do a very
thriving business at the expense of people like me, the consumer.
Here is an eye opener for anyone who
has not had a Payday Loan, the inner workings that lead to a cycle of debt. The
maximum limit for a Payday loan differs from state to state as does the
fees/percentage rate that can be charged. But here, where I reside, you can go
to one lender and get the limit in my state, a loan of $1,000. This is a pay
day loan, a draw against your next check. Keep that in mind, because you can
then go to the next lender three doors down, and get another max loan of
$1,000! Against that very same pay check! Yep, that is right. These stores have
license to lend the max amount without checking your credit and on your good
word alone that you can pay them back. I'm sure you can imagine what a mess
this could turn out to be. An average consumer can pretty much get a draw way
over and beyond what they actually bring home in their net pay. Hey, it really
happens too. Sadly enough.
So, ok, you now have two $1,000
loans with terms of a finance fee averaging around $200 each, so payback due
for a whopping total amount of $2,400 by next pay day. Yikes, what a mess you
are in now. So, what happens if you don't have that much to pay back the lender
and still have money to eat and pay bills? Your option? Roll-over. Yes, these
companies are allowed to extend you the courtesy of paying the finance fee
only, instead of paying back the loan in full. On top of that, you can do this
up to three times in my state. Therefore, by re-financing these loans three
times, and then paying them off on the fourth month, you would end up paying in
total: $3,600!!! Now, if that isn't a fantastic business deal for the Payday
Lenders! And for the consumer, well, they have really taken one in the shorts!
Now, one other option you have when
re-financing these loans is to pay additional money toward the principal to buy
down the final pay-off. So, say you put $300 toward the loan with the first
re-finance. $200 goes to finance fees, $100 reduces the loan. You then owe $900
and have a reduced finance fee the next time, lets say $180. With your next
payment, you can pay $280, reduce the principal to $800 with a re-finance fee
of $160. Again, the next time, you pay $260, reducing principal to $700 and
finance fee of $140. Then when your final payment is due, you owe $840 to pay
it off. With this option you end up paying a total of $3,360 for the two loans,
you saved a whole $240 overall. Whew.
ไม่มีความคิดเห็น:
แสดงความคิดเห็น